Table of Contents
Companies constantly seek ways to expand their operations beyond their borders in today’s interconnected business landscape. From the smartphone in your hand to the sneakers on your feet, the efficient production and distribution of everyday goods is possible thanks to globalization and business process outsourcing (BPO).
But what exactly is outsourcing, and what are its benefits in international business? Is it not too risky to work with a third party from overseas? Or can you turn the challenges of global BPO into your company’s strength?
Intrigued? Let us satisfy your curiosity in this article.
What Is International Business Outsourcing?
International business outsourcing means hiring foreign companies to perform repetitive, non-core functions. Enterprises worldwide adopt this business practice to double cost savings and improve efficiency—all while accessing a large talent pool.
As a result, the global BPO market was valued at $280.64 billion in 2023. According to Grand View Research, the market will expand at a compound annual growth rate (CAGR) of over 9% by 2030. The organization also noted that improved flexibility, enhanced service quality, and reduced expenses drive its expansion.
Moreover, the benefits of refocusing on core initiatives urge businesses to acquire the following functions of BPO:
- Technical support
- Software and application development
- Customer service
- Healthcare support
- Finance and accounting services
- Sales and marketing
- Cloud services
- Human resources (HR) support
- Knowledge process outsourcing
- Manufacturing services
- Legal process outsourcing
Outsourcing in International Business: When Challenges Become Strengths
When exploring what BPO is in the global arena, you might notice that this approach is a more complex solution. Despite its many benefits, challenges might hinder smooth daily business operations.
These difficulties can help you discover hidden capabilities. They point out which areas require urgent improvement. Such a capacity gives you a competitive advantage in the long term when working with a provider. Discover how to transform BPO weaknesses into strengths below.
Hindrances and Opportunities of Different Languages
Global outsourcing involves dealing with people using different languages. Third-party agents from contact and call centers are trained or naturally fluent in speaking and writing English. However, not all teammates and consumers have the same level of proficiency.
These variations result in misunderstandings and misinterpretations if left unaddressed. Specifically, different linguistic backgrounds introduce the following issues when assigning business functions to an international BPO company:
- Varied accents and pronunciations lead to unclear verbal communication, especially during phone conversations or virtual meetings.
- Diverse vocabularies and idiomatic expressions can confuse teams and customers. For instance, a common term in Filipino might be unfamiliar in the United States. Abstract concepts and idioms are also more challenging to express in a non-native language.
- Even when agents and customers speak the same language, their varying cultural nuances and connotations impact communication. Some words might carry unintended meanings or emotions if spoken or written inattentively.
- Sectors have specific jargon and technical terms. Foreign workers encountering unfamiliar words might struggle to comprehend work instructions, impeding collaboration and service delivery.
- Different languages have varying grammar, spelling, and sentence structure rules. This gap ends in ambiguous documentation, emails, and chats if not studied well. It affects the contextual understanding of any written text.
That said, many international customers are more comfortable using their native languages. They prefer businesses that offer support in their language. According to CSA Research, 76% of consumers prefer to transact with brands providing customer care in their native language.
So, instead of worrying about linguistic barriers when outsourcing, your international business can maximize them by hiring multilingual customer service providers. These vendors implement various practices to effectively engage with customers in different languages, including:
- Employing customer support agents who have bilingual or multilingual capabilities
- Implementing language skill assessments and training
- Using customer relationship management (CRM) software with multilingual features
- Utilizing translation and localization tools for written responses and live interactions
- Setting up dedicated communication channels for different languages
Alternatively, you can hire support agents from the Philippines to ensure cost savings while meeting this linguistic demand. The country has high English proficiency, garnering an Education First index score of 578. As a developing nation, it also has a lower cost of living and a lower minimum wage.
Filipinos are trained in or naturally fluent in this language. So, if you have native English-speaking consumers, you can ensure excellent customer service without overspending.
Disadvantages and Advantages of Cultural Barriers
Expect a cultural clash when signing service-level agreements (SLAs) with a foreign BPO organization. Note that customs, norms, and values influence work dynamics and ethics. For instance, decision-making styles vary among cultures. Some prefer to get a consensus, while others want quick and authoritative direction. The style impacts project timelines and outcomes.
Cultural misalignments result in misunderstandings and conflicts of interest. The worst-case scenario is that you might experience lawsuits due to harassment and discrimination. You may also experience these drawbacks when outsourcing in support of your international business:
- Ineffective collaboration
- Slow progress and inefficiency
- Ethical dilemmas
- Dissatisfied customers
- High turnover
- Resistant staff
Despite these disadvantages, cultural diversity still brings significant benefits to your business. A 2022 Research and Markets report shows inclusive teams are more productive by over 35%. Diverse firms also experience 2.5 times higher cash flow per worker.
Apart from increased efficiencies, fostering inclusivity and equality when working with a foreign provider also gives you these advantages:
- Elevate diverse perspectives to encourage unique problem-solving approaches.
- Provide a broader range of insights to make more informed decisions.
- Hone cross-cultural skills for more adaptability, scalability, and flexibility.
- Establish stronger work relationships based on mutual understanding and empathy.
- Bring valuable insights into different markets and consumer behaviors.
Drawbacks and Benefits of Time Zone Differences
Outsourcing your non-core tasks to boost your international business also means facing time zone differences. Overlapped business hours hinder real-time communication with your provider. Hence, it slows down decision-making and problem-solving.
Scheduling meetings, updates, and project turnaround times becomes complex when your overseas third-party teams are offline during your work hours. You might also experience delays in finishing tasks due to waiting to exchange input or feedback.
On the other hand, varied time zones make 24/7 operations possible. This supposed BPO challenge enables the strategic distribution of work between your in-house team and your foreign provider.
You can capitalize on this round-the-clock international collaboration through the approaches below.
- Implement the follow-the-sun model. You hand off assignments from one team to another as the day progresses. For example, your U.S.-based team works on a project during the daytime. It then passes the incomplete tasks to your Philippine-based BPO unit as they start their workday. This approach is effective for urgent initiatives.
- Plan critical handoffs during overlapping hours. This action ensures both parties exchange essential information, answer questions, and continue work without unnecessary delays.
- Minimize downtime. Rotating teams in different time zones helps reduce downtime. They make sure routine tasks requiring 24/7 monitoring are constantly moving forward. Such functions include server maintenance, data processing, and customer support.
The Bottom Line
Outsourcing introduces different challenges to your international business. Linguistic and cultural variations may result in misunderstandings, misinterpretations, and conflicts when working with a foreign team. Inefficiencies also emerge when outsourcing services to a company overseas.
Despite that, you can still benefit from these drawbacks when you apply the appropriate solution, such as picking the right service provider or planning your workflow with a third-party team. As long as you take the best steps, you can anticipate returns on your investment and improved workflows.
Let’s connect if you still have concerns regarding the pros and cons of international business outsourcing. Unity Communications gives you first-hand experience addressing BPO challenges to optimize its benefits. The award-winning provider has skilled employees and advanced solutions to accomplish such goals.
