Unleashing the Power of Cost Savings Through Outsourcing for Businesses in Phoenix, Arizona

Companies, especially small businesses, are always in need of cost-saving strategies. Finding ways to reduce costs is essential, and a ready-made solution exists.

Business process outsourcing (BPO) can help companies save on labor expenses, access wider talent pools, and enhance efficiencies. For example, you can contract with a BPO company in Phoenix with operations in the Philippines and Mexico to fully leverage outsourcing’s cost-effective benefits.

This article discusses how you can realize the power of cost savings through outsourcing to Phoenix. It also shows a comparison between outsourcing and in-house work costs.

The Role of Outsourcing in Unleashing the Power of Cost Savings

What is business process outsourcing? This business strategy enables clients of various sizes to subcontract functions to a third-party team without worrying about time-consuming and costly factors such as recruitment, information technology (IT) infrastructure, office facilities, and payroll.

Clients can instead team up with a BPO provider that can deliver solutions that fit their needs. BPO clients come from various industries as diverse as healthcare, e-commerce, hospitality and tourism, financial services, and insurance companies.

Although various forms of BPO are available, many companies turn to an offshore approach to get the highest return on investment for outsourcing. Outsourcing helps you save money without jeopardizing the quality of service you receive. Specifically, it lowers your spending on technology, payroll, recruitment, and training.

Here are a few ways you can leverage the power of cost savings by outsourcing to Phoenix.

Outsourcing Covers the Cost of Recruitment

Finding new employees is expensive. Companies spend thousands of dollars on job postings, training, and onboarding before a new hire produces results. According to the 2020 Recruitment Operations Statistics and Trends, the average cost per hire for all roles is roughly $3,000, which can be a high load for some companies.

Therefore, numerous businesses are willing to offload tasks to an outsourcing partner. Clients can quickly fill positions that hemorrhage money the longer they remain empty and achieve the power of cost savings through outsourcing to Phoenix.

In addition, recruitment is a highly competitive market nowadays, and you must rival larger companies with better salary offers and benefits to attract top candidates. Not to mention, the entire hiring process takes a long time. Based on the same research, on average, recruiters take more than three weeks to fill a vacant role.

With BPO, you need not worry about the time and money spent landing the right candidate. Your outsourcing partner handles your recruitment tasks—from sourcing to training. The only thing you must do is give them a description of your ideal candidate to help third-party recruiters pair you with an appropriate applicant.

The Payroll Cost Is Lower with Outsourcing

Labor is one of the most significant expenses in a business, with salaries accounting for most of the cost.

Payroll costs, including employee salaries, taxes, paid leaves, and other benefits, are minimal to nonexistent when hiring offshore BPO. For example, Unity Communications is a local outsourcing firm in Phoenix, Arizona, with operations in offshore countries. This model allows you to leverage market-rate salaries in outsourcing destinations with cheaper labor.

Additionally, the lower cost of living in offshore nations means clients can save money without sacrificing quality, given that the education levels, language skills, and qualifications of offshore workers are on par with their Western counterparts. To further illustrate, here is a comparison of the average weekly and monthly earnings in the U.S. and the Philippines.

Note: The numbers shown in the average earnings in the Philippines are converted amounts. In Philippine currency, Filipinos’ average monthly salary is Php 44,600. One U.S. dollar is equal to PHP 55.83 as of June 16, 2023. Conversely, the data used for the U.S. median salary is from the United States Bureau of Labor Statistics.

If you require talent with higher skill levels, ensure your chosen BPO company engages in offshore outsourcing. The difference in labor market rates can help you realize the power of cost savings through outsourcing to Phoenix. BPO providers also often include labor costs in their total service charge, so you do not have to worry about mandated benefits and leaves.

BPO Takes Away the Cost of Training

BPO firms host continuous training programs for their staff. New hires undergo various training sessions before onboarding to guarantee they can perform based on client expectations. According to Training Magazine’s Training Industry Report, clients can save up to $1,075 per employee per year in training costs.

Whether you hire front- or back-office outsourcing, training matters so workers can deliver the desired quality. Moreover, this generation of workers is always searching for career growth opportunities. Workers see training as an incentive to stay with a company, so BPO providers offer them avenues to grow their careers to prevent high attrition rates.

Take advantage of the power of cost savings in training expenses through outsourcing to Phoenix. Seize the opportunity by providing training materials about your processes that the third-party team might need. Relay to the training instructor what you want to see from your external staff, and be honest about the key performance indicators (KPIs) you plan to set.

This helps the training manager identify areas to concentrate on and measure your third-party team’s skill level and qualities. Outsourcing is a two-way street, so you must play your part to succeed.

You Need Not Invest in the Latest Technology

Adding more people to your team often requires additional infrastructure, such as software licenses, computers, IT equipment, office space, and furniture. If you use cloud services such as contact center as a service (CCaaS), you might also need to pay extra for additional users.

Striking a balance between the cost of additional staffing and a possible uptick in revenue or sales takes a lot of work. It sometimes forces organizations to put such plans on hold. You can negate this problem and achieve the power of cost savings through outsourcing to Phoenix. The service provider pays for, owns, and manages the infrastructure.

Specialized outsourcing vendors have proper technological equipment and tools that third-party teams can access when handling your processes. For example, they use built-in software to make and receive calls from end customers. The BPO firm sets up all the tools your agents need.

Compare that to having an internal contact center or tech support team. Starting from scratch means searching for high-quality software with the best pricing, paying for the license, setting it up, learning how to use it, and training your agents on the best practices. The whole process is a waste of your money and time.

Outsourcing Lets You Concentrate on Core Competencies

According to research, 57% of businesses outsource to cut costs. Teaming up with a quality provider in Phoenix, Arizona, with operations in affordable destinations such as Mexico and the Philippines, is a sure way to reduce your bottom line.

Moreover, clients can often find themselves with extra funds to invest elsewhere, thanks to outsourcing. From upgrading technology and improving research and development to increasing marketing efforts, companies can better spend the money they save on labor in other areas to increase profits.

In business, time is money. You can concentrate more on profit-generating activities when you and your internal team no longer need to worry about time-consuming and recurring tasks.

Unlike the first four benefits we discussed, this is a collateral way of unleashing the power of cost savings through outsourcing to Phoenix. Regardless, increasing your in-house team’s productivity is a major consideration.

Calculating Cost Savings in Outsourcing vs. In-House Work

Now that you know the power of cost savings through outsourcing to Phoenix, let us discuss how to compute the possible amount you can save. You get a better idea about savings and returns when you do a proper cost analysis.

Consider all the costs needed to operate when comparing in-house work and outsourcing. For example, you pay $15 per hour per staff member for your in-house team in the U.S., but that differs from your all-in hourly rate. The base wage rate of agents is only one of many line items to factor in. 

A good rule of thumb is that an in-house team’s fully loaded or all-in hourly rate is around 2x to 2.5x the base wage rate since your company’s cost includes hiring, training, benefits, insurance, facilities, technology, and management. So if you pay each staff member $15 per hour, your in-house all-in hourly rate is $30 to $35 per hour or more.

Therefore, a BPO firm that charges $15 per hour saves you about 50% of the cost. You must account for the following factors when computing your potential cost savings:

• Size of the team
• Skill level and job title of the third-party staff
• Labor market in the location where you want to outsource
• Necessary hours of operation
• Service fees

For a more accurate comparison, you can also request a quotation from your short-listed BPO firms to know how much their services cost.

The Bottom Line

Outsourcing intelligently with the right BPO partner is key to unleashing the power of cost savings through outsourcing. To properly calculate potential cost savings, do more than just compare hourly rates. You should also include factors such as return on investment, scalability, and long-term value.

 Let’s connect if you want an outsourcing collaborator to help you maximize cost savings.