BPO: What is Business Process Outsourcing?

Business Process Outsourcing definition

BPO. Business Process Outsourcing means to subcontract business functions and processes to third-party suppliers and providers. When companies outsource business processes, they delegate tasks and duties to companies that are usually specialized in handling them. These processes had been usually managed by internal departments and employees in the past.

When the market demands increased, companies started to look for ways to increase agility and flexibility in order to be competitive and stay relevant in the market. One of these strategies was to delegate secondary tasks so that they could focus on their core competencies. Even though these tasks were not the main company activity, they were still fundamental to the companies’ operations.

Business process outsourcing started as a way for companies to reduce costs, increase productivity and have access to a specialized workforce and advanced technology without needing to make an investment. Nowadays, business process outsourcing has evolved to be a strategically critical business approach for improving the business model of a company.

Types of Business Process Outsourcing

Business process outsourcing can be categorised according to two main criteria: service type and location. If we break down business process outsourcing by service type, we can identify two main types: back office outsourcing and front office outsourcing. If we were to categorise BPO by location, there would be three main outsourcing types: offshoring, nearshoring and onshoring.

It is important to have an understanding of the main BPO types in order to be able to decide what is best for your company’s needs.

Back Office vs Front Office Outsourcing

The difference between these two types of outsourcing is whether the outsourced tasks are related to client relationships or admin tasks.

Front Office Outsourcing- When the outsourced services are related directly to the customer and the revenue generation. Companies choose to outsource customer related processes because it helps to put the focus on the customer without compromising the quality of the services and products provided. Good Customer Relationships and Customer Experience not only makes the companies stand out from the competition but it also helps grow the revenue and the business.

Some front office services that can be outsourced include customer service, telemarketing, marketing, sales, help desk, technical support, etc.

Back Office Outsourcing- Includes all the administrative tasks and functions that help run, manage and support a company “behind the scenes”. Normally, back office services are non-core functions of a company that are nevertheless important for the successfully running the business. Delegating such tasks is an important strategy for companies that want to focus on core functions instead. Some of the main back-office services that can be outsourced are data entry, document archiving, payroll management, accounting and bookkeeping, invoice management, human resource tasks, IT support, etc.

Outsourcing strategy and BPO partner

The location of the BPO partner plays an important role in the outsourcing strategy of a company. The geographical position is an important factor when taking into account time zones, cultural differences, costs, language skills, etc. Therefore, offshoring, nearshoring and onshoring, each have their own advantages and disadvantages, which every company should take into consideration before choosing their BPO partner.

Offshore Outsourcing

Offshoring means to subcontract services to a company based far away from a company’s headquarters. Normally, offshoring means to outsource to a company based in a different continent. The main advantage of offshoring is having very low operational costs. Another advantage is covering service hours that would be otherwise very difficult to manage (night shifts and after-hours). However, outsourcing to a distant location can become problematic as communication problems may arise. (different time-zones, difficult to reach, difficult to monitor, traveling inconveniences, language, and cultural barriers, etc.). Having low costs at the expense of service quality is far from an ideal business strategy. In the long run, choosing low costs over quality will prove to be an expensive solution instead.

Nearshoring Outosourcing

Outsourcing to nearshore locations means to delegate services to a company based near your headquarters, usually within the same continent or region. Nearshoring can still provide the cost benefits of offshoring without the hassle of miscommunication. Despite being slightly more expensive than offshoring, nearshoring has several other advantages, such as being in a similar time zone to your partner, having more control over your projects, having a similar business culture, having access to a larger pool of workforce and talent, etc. Outsourcing to a nearshore location enables companies to reduce risks associated with offshoring.

Onshoring Outsousorcing

Onshoring - Outsourcing to an onshore locations means to outsource to a local company, based in your own country. The main benefit of outsourcing to a local company is the proximity of the outsourcing partner and better control of the operations. Onshoring prices are usually higher than both nearshoring and offshoring. Having a higher price doesn’t necessarily mean receiving a more qualitative service though. Outsourcing to an onshoring location will restrict the access to global talent, will make scalability and flexibility more difficult and will limit the area of expertise available.

What business processes can be outsourced?

As already mentioned, the gamma of business processes that can be outsourced is very wide. Companies can choose to outsource individual non-core processes or even whole departments. Some of the most popular services that companies choose to outsource are Customer Care, Data Entry, Back Office, Document Management, Sales and Marketing, Helpdesk, etc.

The recent years have also shown a rise in HR, Finance, and IT outsourcing, with companies choosing to have a more specialized partner to manage the processes related to these departments, such as accounting and bookkeeping, recruitment, payslips and payroll, technical support, issue logging, etc.

To have a clear outsourcing strategy, a company can start by analysing the internal company goals, the focus of the company, the costs of the operations and the current strategies in place. By performing and As-Is and To-Be analysis, a company can identify areas of improvements related to the services, actions to reduce costs and opportunities to generate more revenue which can be achieved by strategically outsourcing certain services or departments to a trusted BPO partner.

How to choose the best BPO partner?

There are several aspects to keep in mind when choosing your BPO partner. The location is one of the most important factors to help with the decision making. Outsourcing to a nearshore BPO, such as WeAreFiber, can help maintain a balance between the cost and quality of the services.

While price is important, quality should be the main concern for companies who want to outsource. A good BPO partner should have the right procedures in place to ensure high-quality rates. At WeAreFiber, we have set up a two-level Quality Assurance Department to ensure that your quality requirements are met.

Moreover, security and data protection is also very important. A trusted BPO partner should be GDPR compliant and have a clear Data Protection Policy implemented. The ideal BPO partner should also provide flexibility, scalability, and transparency.

We are Fiber

We are Fiber, founded in 2006, is a Business Process Outsourcing Provider operating mainly in the European market. We are Fiber is focused on providing back and front office solutions such as Customer Service and Data Entry to blue chip companies as well as to startups and SMEs.

Our experts can help you define your business goals and outsourcing strategy by analysing your business model and your existing operational process. We have a proven track record of success gained by helping companies across different industries, such as Travel and Leisure, Food and Beverage, Transport and Logistics, Healthcare, etc.

Click here if you’d like to request a call-back from our team, dedicated to understanding and analysing your outsourcing needs.

info@wearefiber.com

Phone (It) +39 02 42 10 11 22
Phone (Uk) +44 20 38 70 44 08