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Companies must constantly innovate to adapt to changing market conditions, technological advances, and increasing customer expectations. To do so, they need a holistic business model that elevates their operations and helps them attain long-term success.
Business process outsourcing (BPO) is a viable solution. Beyond enhancing cost savings, operational efficiency, productivity, and time to market, BPO offers advantages that catalyze business model innovation.
Keep reading to learn about outsourcing’s pioneering role in business transformation.
The evolution of BPO as a business innovation catalyst
To start, what is BPO? Previously known as subcontracting, it is the practice of employing a third-party company to handle non-primary tasks.
The strategy originated in busy cities, such as New York and London, in the 19th century when local merchants employed a cost-effective, third-party workforce to produce their goods. They commonly subcontracted the manufacturing of essential products, including footwear, furniture, and clothing.
In the late 1980s, major U.S. manufacturers sought to reduce global shipping, telecommunications, freight, and transportation costs. This resulted in them moving their production to emerging economies, where skilled labor was affordable.
Advancements in manufacturing data collection and analysis let businesses more accurately track the effectiveness of outsourcing production. Fast-forward to today, and widespread digital transformation and internet service availability have boosted global BPO further.
Such remote capabilities have enabled BPO to become a business model innovation catalyst. They allow providers to build a large talent pool and offer advanced technology worldwide. Moreover, firms combine all these resources to expand their coverage from manufacturing to other essential functions of BPO:
- Customer service
- Information technology (IT) support
- Accounting services
- Healthcare support
- Cloud services
- Human resources (HR) support
- Knowledge processing
- Legal processing
BPO companies have also broadened the industries they serve. In addition to retail, manufacturing, finance, and healthcare, their client organizations now include those from agriculture, education, tourism, gaming, and entertainment, among others.
How BPO accelerates business model innovation
BPO providers help companies of all sizes change how they create, deliver, and capture value for their offerings. Third-party vendors play a critical role in clients’ business transformation by revamping processes to reach the target market, produce innovative products, and operate more cost-effectively.
According to Deloitte’s 2023 Global Shared Services and Outsourcing Survey, BPO allows organizations to achieve process standardization and efficiency. The report also revealed that third-party automation tools are among the primary enablers of positive outcomes.
Besides advanced technology, support vendors provide a large pool of flexible and skilled professionals to streamline operations further. Given these resources, let’s detail how BPO companies catalyze business model innovation for small, mid-sized, and large enterprises.
Prioritize value creation
Outsourcing is instrumental in helping businesses prioritize value creation. Instead of the usual task-oriented approach, service vendors focus on attaining client-specific goals. They work closely with clients to understand their strategies and develop complementary techniques to help boost their brand’s voice.
As part of this shift in priority, BPO companies use advanced data analytics tools to study trends and unlock opportunities for enhanced business models. The collected insights reveal the following information:
- New market segments and previously untapped customer bases that prompt the creation of new products or services
- Informed pricing packages that better match customer value perception
- New revenue streams that also ensure returns on BPO investment
- Improved customer journeys across various touchpoints, leading to higher satisfaction and retention rates
Redefine customer experience
BPO call centers redefine the customer experience by implementing an omnichannel approach to personalize consumer support. They use a unified, cloud-based solution to enable seamless engagement, allowing customers to seek support through their preferred channels.
The contact center platform’s integrated dashboard allows support agents to continue conversations with customers even when switching channels. The tool’s customer relationship management (CRM) feature helps the agents quickly respond to repetitive inquiries without requiring consumers to explain issues or provide information again.
According to Zendesk’s CX Trends 2022, customers are eager to purchase more with companies that personalize support and do not require them to repeat information. Letting consumers find answers online independently also encourages them to stay with the brand.
Hence, service providers further improve their clients’ customer service by deploying chatbots, automated emails, and voice assistants. They also prepare frequently asked questions (FAQs) and knowledge base articles to enhance self-service options.
Optimize daily operations
Hiring third-party agencies optimizes daily operations. BPO firms leverage artificial intelligence (AI) and robotic process automation (RPA) to analyze existing workflows and determine areas for improvement. They help develop strategies and boost processes by:
- Removing redundant steps. BPO companies perform rigorous process mapping to identify each stage involved in completing an assignment. The results reflect duplicated tasks, unnecessary approvals, and information handoffs. They use these insights to create techniques to eliminate inessential activities, delays, and errors.
- Standardizing procedures. Based on industry best practices, support vendors help develop standardized operating procedures (SOPs). This concise and step-by-step guide addresses duplicate tasks and promotes consistent outcomes.
- Automating repetitive tasks. After performing the first two steps, BPO companies utilize RPA bots to sort, filter, and organize data automatically. This simplifies the distribution of tasks to the workforce and the processing of customer inquiries.
- Helping adapt to changes. In addition to automating tasks, BPO services should be scalable. Providers can increase or decrease the deployed team size based on clients’ workload fluctuations, changing requirements, and set timelines.
A real-world example of business model innovation through outsourcing
Spotting specific examples of successful BPO-supported business model innovation is tricky. Providers often help optimize existing processes behind the scenes. However, we can explore cases where they drive change to achieve a competitive advantage.
Netflix is among the examples of companies that outsource to innovate and increase efficiency. The popular online streaming platform needed help as it was unable to meet growing demand with its data centers and servers alone. It also encountered scalability, reliability, and cost issues.
Netflix migrated its entire IT infrastructure to the cloud by partnering with a third-party cloud service provider. The vendor helped the streaming service scale its resources based on viewer demand worldwide at reduced infrastructure expenses.
Moreover, the cloud support contractor let Netflix store and analyze massive viewer data. The gathered insights enabled the streaming media company to provide personalized content recommendations and libraries. The pay-as-you-go BPO service’s benefits also include added security capabilities, uninterrupted user experiences, offline downloads, and 4K streaming.
The bottom line
BPO is a critical driver of business model innovation. Beyond cost savings, providers deliver scalable resources to help create enterprise value, enhance the customer experience, and boost daily operations.
Although it might be challenging to specify how outsourcing directly drives innovation, the example above proves that the practice’s contributions are undeniable. If you select the right BPO partner, you can maximize its advantages without overspending.
Let’s connect and discuss your business transformation and growth requirements! Unity Communications offers human and tech resources capable of adjusting to your evolving needs.
