Business Process Outsourcing
The key to success in this highly competitive business environment is to control costs, improve customer service and to focus on your core competency. The magical buzz word that does all these being – outsource!
Business process outsourcing also known as BPO refers to contracting of a specific function or business task to a third party service provider. Typically, specific functions are outsourced by companies as a cost-saving measure. BPO can be classified into two major categories namely back office outsourcing and front office outsourcing.
Back office outsourcing includes internal business processes such as payroll, Human Resources, billing or purchase while front office outsourcing comprises of customer-facing functions such as technical support or marketing. Largely, BPO functions are contracted not only outside a company to a third party, but are also contracted outside one’s country to reduce costs, which are also referred to as offshoring. The BPO industry has emerged as one of the biggest industries offering a plethora of opportunities worldwide. The advantage outsourcing has to offer easily outshines the drawbacks.
The BPO Edge!
Outsourcing offers an edge over other companies in numerous aspects. In addition to high quality services and cost-effective measures, outsourcing offer the following benefits:
Facilitate in focusing on the core capabilities
In an attempt to understand their true core competencies, companies review their internal operations and outsource the day-to-day office operations. By outsourcing non-core back office activities, the organization can redirect those key human resources on to greater value added activities. Thus, business process outsourcing helps companies build long term relationships with their customers by expanding their ability to offer a variety of innovative products, continuous improved service levels, accelerated time-to-market and consequently, reduced costs.
Cost Effective
One of the most important benefits derived from outsourcing is in terms of cost savings. Companies that outsource their work have access to the best of talent and expertise in the outsourcing domain at very low costs. Research reveals that companies that outsource garner savings of about 40 – 50% which is highly substantial and extremely beneficial. Multinational companies leverage the huge pool of human resources available in developing countries such as India, China and others to outsource their non-core activities and processes while taking advantage of low cost of labour. Additionally, BPO provides quantifiable benefits through improved efficiencies, low overheads, reduced payroll and benefit expenses and fewer capital investments.
Increases business effectiveness
Studies reveal that 18% of companies that outsource their training requirements, for example, rate their learning more extremely effective than those that run all their training programs internally. Companies that outsource focus more on training programs tied to business impact. By leveraging technology and enhanced controls, outsourcing helps in increasing operational flexibility and scalability without tying up capital.
Companies are often able to capture new efficiencies and consequently improve their productivity. Availability of highly qualified talent pool and quicker adoption of well-defined business processes leads to productivity improvements without compromising on quality.
Flexibility
BPOs provide the management with flexible and scalable services to meet the customer’s ever changing requirements which provide a distinct advantage to the organization, especially to support company acquisitions, consolidations or joint ventures. With the capability to offer customized services to suit the needs of their customers, the organizations that outsource benefit from increased customer satisfaction and goodwill that go a long way in increasing their brand value.
Strengthens competitive position in market
Organizations that leverage the BPO strategy enjoy improved financial and competitive positions and have a distinct advantage over their competitors in terms of increased customer satisfaction, increased operational effectiveness, access to global capabilities, increased cash flow and faster time-to-market.
Business Process Outsourcing is one of the most effective methods to achieve new levels of success, productivity and profitability. BPO provides access to proprietary work flow systems, process re-engineering skills, innovative staffing and delivery models, combined with world-class technology delivered by experts. Outsourcing has evolved as one of the biggest steadily growing industries, especially in the developing countries with a large human resource pool owing to the multiple advantages and benefits that it offers!
| By Janani Rajagopal Published: 4/7/2008 |
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Financial Benefits of Outsourcing
So why does everyone want to outsource their business process. Well there surely must be huge benefits for so many businesses to be undergoing this process on such a large scale.
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