What is business process outsourcing and why does your company need it?

Running a company is hard work and the more the business grows, the more work there is to do. Ensuring your business runs efficiently requires setting goals and then managing the workflows required to meet these goals. Sometimes, however, there are just not enough hours in the day to complete all the necessary tasks, and overloading your resources can put unnecessary strain on the organisation and ultimately negatively impact productivity.

If your business is overburdened and underperforming, it may be time to seriously consider assigning certain processes to a business process outsourcing company.

What is business process outsourcing?

According to Investopedia, business process outsourcing (BPO) involves making use of third-party vendors or sub-contractors to carry out certain parts of business operations.

There are two types of BPO – front office and back office. Front office outsourcing focuses on activities that are external to the company, such as marketing and customer service, while back office BPO is all about the internal facets of the business, such as payroll and human resources.

Which companies invest in BPO?

BPO originated with large manufacturing companies needing assistance with supply chain management, but it soon grew to include all sorts of sectors, including services companies. Today, an extensive range of technical and non-technical services can be outsourced to a third-party vendor, and businesses of all types and sizes, across all industries, make use of BPO.

What are the benefits of BPO?

In a nutshell, business process outsourcing enables companies to focus on the primary business offering that is critical to their success, rather than activities that are not directly related to their core business.

For example, by outsourcing the company’s payroll function to a payroll bureau, the company no longer needs to waste time monitoring the payroll administrator’s performance but can instead focus on highlighting its business differentiators, which can ultimately lead to enhanced customer satisfaction and increased profits.

Outsourcing certain business processes also helps to cut in-house labour costs, particularly around recruitment and training, and finding the office space to accommodate employees.

There are numerous other advantages to business process outsourcing. These include:

Facilitating global expansion

When a company decides to extend its footprint across international borders, using the services of a BPO provider can be extremely beneficial, especially if that provider has experience in the local industry, has national legal expertise, and is fluent in the official language of the country or countries they wish to expand to.

Improving efficiencies

Many business leaders mistakenly believe that no one can do a job as well as they can. Consequently, they are often reluctant to entrust the tasks they usually perform to others. But in today’s fast paced, highly competitive business world, it’s important to play to your strengths if you want your business to succeed. This means careful delegation of certain roles and functions when the situation warrants it.

Outsourcing functions such as your human resources and payroll, for example, gives you access to a team of experienced dedicated professionals – experts who have a thorough understanding of the work they do and can do it far more efficiently than you can.

Maintaining flexibility

Companies that outsource their non-essential functions to a BPO provider are more agile, simply because they are not bogged down by non-core activities. As a result, they are far better placed to respond to changes in the market and can quickly harness any new opportunities that arise.

Are there any risks to BPO?

While there is considerable benefits to business process outsourcing, it’s important to be aware that any fundamental change in work processes comes with a certain degree of risk. For the most part, the benefits of BPO outweigh the risks, but it’s always a good idea to be fully informed of where things can go awry before choosing to go the outsourcing route.

Choosing the wrong provider 

Choosing the wrong BPO provider can have serious consequences for the business. Make sure you sign up with a provider that has the requisite expertise and experience for your specific requirements and can produce the success stories and references to prove it.

Security

Data security and privacy are always a risk when outsourcing is involved. Consequently, it is important to work with a BPO provider that values privacy and security and demonstrates this by implementing comprehensive security policies.

Underestimating service costs

Business process outsourcing is all about gaining an edge over competitors through cost savings. But unless you do your homework properly, you may end up paying more than you originally planned. Before signing any contracts, make sure you read the fine print. If you don’t understand all the terms and conditions correctly you could get hit with unexpected costs.

Business process outsourcing continues to evolve and, owing to the many benefits it offers, has become an essential function for many businesses.

If you are considering outsourcing your human resource and payroll function to a reputable BPO provider, CRS Technologies can help. Give us a call and we’ll show you how.