Thursday, January 16, 2020

The 5 whys for Business process Outsourcing

Business process outsourcing (BPO) is the practice of contracting a specific work process or processesto an external service provider. The services can include payroll, accounting, telemarketing, data recording, social media marketing, customer support, and more.

Why do most companies that use BPO do it to cut costs? As with most corporations cost-cutting while maintaining or improving productivity is the driving force.  Some business processes are simply not in some corporation’s core competency so they can outsource to a BPO company that has that core competency.  Payroll was one of the first processes outsourced and several big companies specialize in that.  

Why do some companies use BPO to stay up with technology?  Just as not having a core competency in a business process can lead to BPO, so too can changing technology.  A BPO company can usually afford to keep current on technology like hardware and software as the costs are spread across multiple client's, where a small company must amortize technology over a longer term.  New technology can cut costs for the BPO and pass the benefits of the new technology to their clients and perhaps that might include further cost cutting.

Why BPOs help their clients learn more and leverage that knowledge for competitive advantage?  Especially in the areas of advertising, social media management and innovation management, knowledge gained that is shared by the BPO to their clients can significantly impact corporate strategy, product and their own processes.  It is not uncommon for a BPO to outsource almost all their business processes except their core competency for all the same reasons their clients outsource to them.

Why do BPOs tend to cluster in India, the Philippines and other countries? Many factors will cause BPOs of a feather to flock together to include language competency for call centers; education level, industry focus, cost of living/wages and the tendency for skills in one core competency to be sought after by startup BPOs in the same locale.

Why should you consider BPO of one or more of your business processes?  Money is one.  How much will it cost you to hire and pay a staff with the competency that will compete with BPOs? Can you even find much less afford the top people in a field where BPOs already have significant highly skilled and experienced staff? What is the opportunity cost for not investing in your core competency instead of trying to duplicate what a BPO offers?

Let me know if you have any questions or comments.

2 comments:

  1. BPO's are proactively and aggressively focused on employee health & safety, while simultaneously deploying Business continuity plans in this pandemic. You may know it as simply outsourcing. When a business utilizes BPO, it finds an outsourcing company that is able to provide outsourcing services for the specific business function the company wants to outsource. Is it possible in this situation though? Learn more here: OBP offshore outsourcing company

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  2. Nice to read about BPO in your article.This Article explains everything about BPO which is necessary for all. You does your best for this blog. Great Article. Thanks For Sharing this type of useful article. Business Process Outsourcing Companies Australia.

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