- October 22, 2021
- Posted by: Trust Bill Atorudibo
- Categories: Business Development, Business Outsourcing
While it’s virtually impossible to find any business or company today that hasn’t heard of business process outsourcing, many business owners are still ignorant of the extensive benefits they stand to gain from adopting an outsourcing model.
Running a business involves making sure all your internal and external resources are effectively churning out profit or growth. But with so much work to do in terms of keeping your customers happy, making profit and plotting a growth pattern for your company, how can you use effective outsourcing to stay ahead of the competition?
We’ll explore what makes business process outsourcing so important, why top companies prioritize effective outsourcing techniques and how you can cut costs, increase productivity and achieve tremendous growth through an effective outsourcing model.
What Business Process Outsourcing Means
Business process outsourcing is a subset of outsourcing that entails hiring third-party service providers to handle different business-related processes and duties. In other words, you’re getting an external body to take some load off your hands.
The decision to outsource usually arises when it becomes clear that a more specialized company is capable of carrying out an operation much better than your in-house staff. In some cases, organizations discover that outsourcing business processes is actually very beneficial; apart from providing finesse to core operations, it could also entirely eliminate the need for a whole in-house department.
Organizations of all sizes outsource activities – from fledgling startups to giant Fortune 500 corporations – and demand is increasing as new and creative services are developed and businesses seek benefits to stay ahead of the competition.
Although manufacturers were the first to employ BPO, almost every industry on the planet today incorporates it into their business strategies.
Why Businesses Need Outsourcing Services
As Nigerian businesses continue to evolve technologically, the spotlight is increasingly shining on the fluidity of business processes. Also, with more and more customers hinging their loyalty on service efficiency and speed of delivery, companies are having to do double-time to ensure they keep solving consumer problems in real time.
But what’s really important to note about business process outsourcing is how much lighter it can make the company’s workload.
Reports show that the main reason companies are jumping on the BPO bandwagon is because of the opportunities it provides for lower expenditure and better, more focused company growth.
Are There Benefits To Gain From Outsourcing Business Processes?
Depending on the industry your business operates, the composition of your internal and external processes might differ. Yet despite the structure or composition of your company, selecting the right operations to outsource can help you achieve one or all of the following;
1. Increased Speed And Efficiency
Businesses that outsource procedures choose to delegate certain activities to specialists, saving time, enhancing accuracy, and expanding their capacity. For example, a BPO that specializes in records management may automatically index documents, making them retrievable and maintaining a firm in line with regulatory standards. This replaces manual data entry and storage.
2. Higher Level Of Flexibility
Businesses that outsource non-critical tasks can respond more swiftly and efficiently when managing the risks involved with launching new goods or services.
Outsourcing noncritical services allows firms to focus their internal resources on core strengths and critical business functions. For example, outsourcing your organization’s internet needs saves you the cost of hiring in-house tech bros and worrying about maintaining servers and hardware
3. Greater Focus On Core Functions
Outsourcing business processes helps firms to focus on their core offers rather than corporate functions that aren’t directly related to their core operations. For example, while outsourcing, the corporation will not have to supervise the payroll accountant’s performance. Rather, it may concentrate its efforts on emphasizing its competitive advantages and increasing overall development.
As a result, these measures can increase a company’s competitive edge and improve its interactions with the value chain. Ultimately, the organization will benefit from higher customer happiness and profitability.
4. More Time & Resources To Focus On Competition
Companies may devote more time and attention to the operations that distinguish them in the marketplace since they often outsource non-critical business activities such as banking services.
5. Increased Global Presence
It’s easier to focus on global expansion when you are not burdened by monitoring daily activities that are still integral to your company’s growth.
Furthermore, companies who serve customers across different time zones and languages can get much more reliable feedback when they outsource their communication needs to outsourcing companies that specialize in customer support
Some Outsourcing Risks To Note
Although the outsourcing model comes with lucrative benefits, there are also certain risks that you might need to watch out for when choosing which processes to outsource.
1. Higher Risk Of Data Breach
Outsourcing frequently necessitates firms sharing sensitive data and information with their service providers, increasing the chance of a security breach. With information systems (IS), the danger can be considerably larger because hacking is on the rise and international governments have differing security needs.
2. Less Control Over Quality Management
When a service supplier is located hundreds of kilometers away, quality assurance might be difficult. Language difficulties can further complicate the BPO process by delaying productivity and feedback, resulting in lost time and money. Furthermore, cultural variations and time perceptions can have an impact on how service providers do business and perceive productivity.
3. Overdependence Can Lead To Greater Future Costs
Companies might become overly reliant on their service suppliers over time. When the cost of services rises, overdependence can become a problem. Furthermore, if a vendor suffers a severe drop in productivity or closes down operations, the employing business may find itself in a bind.
What You Can And Should Outsource
While some businesses might outsource important internal processes necessary to keep the daily wheel spinning, some other companies may be looking for an easier way to stay in touch with their customers.
Understanding what exactly you need to focus on in terms of growing your business will help you draft the perfect outsourcing strategy or even tell if you need to outsource at all.
Here are some common operations frequently outsourced by top companies around the world.
1. Customer Support Services
Outsourcing customer support services will usually vary based on company structure and industry. However, the major operations involved in this BPO model include:
- Voicemail services
- Appointment scheduling
- Email services
- Marketing program
- Payment processing
- Order processing
- Quality assurance
- Customer support
- Warranty administration
- Client feedback
2. Back-Office Transactions
Some major back office processes you could outsource to lighten your in-house load include:
- Check, credit, and debit card processing
- Direct and indirect procurement,
- Transportation administration
- Logistics and dispatch
- Warehouse management
3. IT & Software Operations
With digital services continually expanding, there are host of IT operations that can be outsourced to ensure they are handled appropriately. Some of them include
- Application development and testing
- Implementation services,
- Automated data capture
- General Internet hardware and networking services
4. Finance & Accounting
While smaller companies might prefer to handle finance in-house, larger organizations may prefer to use professional third-party companies to outsource several financial operations such as:
- Billing services
- Accounts payable, & Receivables
- General accounting
- Regulatory compliance
5. Human Resource Management
BPOs can assist in resolving several workforce issues. However, several other HRM duties you can outsource include
- Payroll services
- Healthcare administration
- Employment and recruitment,
- Worker training
- Insurance processing
- Retirement benefits
As a business owner, it’s important to understand how important a good outsourcing model is to your ability to stay competitive. While outsourcing business processes doesn’t guarantee company success, it’ll give you more time to focus on your core business goals. You’ll be able to focus more, adapt more and build more.
Of course, drafting an effective outsourcing strategy is one half of the mission. Finding a quality outsourcing company to help you improve the quality of your business processes can be the difference between good business and great business.