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Despite steady growth and improvement, the business process outsourcing (BPO) industry and its service providers face certain issues. Robust data security, effective knowledge transfer, smooth collaboration, and open communication are all benefits of outsourcing. Still, client companies should expect possible drawbacks when working with a third-party service provider.
What are the potential problems with outsourcing, and how do you solve them?
We have named five BPO challenges faced by businesses and their best solutions in this article. Read on to learn about these challenges.
Potential BPO Challenges and How To Manage Them
Before diving into the potential challenges, let us talk about what BPO is. BPO is when companies delegate specific processes to a third-party firm. Its primary goals are to cut costs, free up employees’ time and resources, and allow companies to focus on core aspects of their business.
The BPO industry is now a routine part of the business landscape. It promises to improve efficiency, save money, and offer solutions otherwise not available in-house. However, BPO has unique challenges not often found with an in-house team. So businesses planning to adopt the strategy must learn a different mindset to successfully outsource.
Here is an overview of common BPO challenges and valuable solutions to overcome them:
1. Different Organizational Culture
Outsourcing is a gateway for companies to tap into and harness global talent, but it often comes with a substantial challenge – navigating cultural disparities. Companies encounter two distinct cultural barriers when outsourcing: corporate and regional.
Why does this happen? Corporate disparities arise due to the inherent contrast between the collaborating organizations. Meanwhile, regional disparities stem from the geographical separation of the client and the BPO service provider.
These variances in organizational culture have far-reaching implications, influencing team dynamics, communication, interpretation, and comprehension, all of which can impact productivity and commitment. The existence of cultural differences heightens the risk of misunderstandings and conflicts between the two parties.
Solution: Learning each other’s organizational and regional culture
A potent solution to this challenge involves crafting a comprehensive training program tailored to acquaint the in-house team with the external party’s organizational and regional culture. Similarly, the BPO company should undertake training initiatives for its personnel, specifically focusing on the client’s geographical and organizational culture.
The initial weeks of the partnership should be dedicated to fostering collaboration and mutual understanding. This phase prioritizes the assimilation of the client’s culture and ensures alignment with the third-party team regarding working style and the overall work environment.
2. Unclear Data Security Protocols and Intellectual Property (IP)
One of the BPO challenges one might encounter is unsecured data privacy and IP. Revealing vital company information, such as critical processes and business assets, is inevitable when working with a BPO provider. You might also have to share tools and resources.
A company’s primary concern should be cybersecurity and protecting intellectual data, from business plans to trade secrets. Total IP and data protection are critical, regardless of your company’s size. Failure to manage data appropriately leads to severe long-term repercussions.
Cyberattacks increase 50% year over year, with each organization facing a record high of 925 weekly cyberattacks globally. The average total cost of a data breach is now $4.24 million.
Solution: Working with reputable companies and crafting non-disclosure agreements (NDAs)
Signing legally binding contracts, such as an NDA, mitigates the risk. Ask your provider to sign an NDA at the onset. The danger of data breaches is minimized when the third-party provider maintains strict data protocols.
Another way to prevent this problem is to work with a reliable company. The BPO sector has numerous service providers to choose from, but not all of them have robust data security. An International Organization for Standardization (ISO) certification and strict security norms are some features to consider when picking a partner.
3. High Employee Turnover
The employee attrition rate is one of the biggest and most consistent BPO challenges. The outsourcing industry has an average turnover rate of 30% to 45%. This means BPO providers must constantly replace agents who leave.
Partnering with a BPO provider with a high attrition rate harms customer satisfaction. A new third-party agent unfamiliar with your customer service procedures and brand voice might assist clients who contact your company for assistance. The result is decreased customer satisfaction.
Many factors affect the turnover rate, including company culture, work interest, and advancement prospects. Agents might also leave if they feel they are underqualified or overqualified for the role.
Some agents also take on a contact center role to make money until they find a different job. Others do not see contact centers as a valid career option. They might find the work environment unfavorable, the job monotonous, and the pay too low. Moreover, younger employees are more likely to job-hop than older ones.
Solution: Designing higher-quality retention strategies
Agents inevitably leave. However, implementing better retention strategies and work cultures can reduce attrition. Check whether your service provider does the following:
- Showing appreciation for high-quality work through rewards and incentives
- Improving work engagement and morale by incorporating fun activities and sharing work goals
- Giving agents opportunities for career advancement and growth
- Introducing agents to the company verticals
- Enhancing training programs to upskill agents and boost company loyalty
Worker satisfaction is good for the BPO provider and your business. An empirical study from the University of Oxford discovered that satisfied employees are 13% more productive. Good benefits and a positive culture are vital to improving workplace satisfaction, reducing employee attrition, and exceeding customer expectations.
4. Difficult Productivity and Performance Measurement
Managing performance and assessing productivity pose significant challenges in BPO, particularly when dealing with contractors operating remotely or in offshore locations with disparate time zones.
Initially, productivity was measured as a simple ratio of output generated over time. However, this approach falls short in considering essential factors such as service quality or the inherent complexity of tasks. Effective productivity measurement necessitates evaluating both the time invested and its efficiency. This entails selecting the appropriate metrics and comprehensively evaluating the performance of the entire workforce.
Solution: Using a project management and time-tracking tool
To address this challenge, organizations can leverage project management and time-tracking tools, which serve as valuable assets in enhancing productivity across the spectrum. These tools facilitate a range of functions, including:
- Real-time monitoring of productive hours within specific timeframes.
- Comprehensive tracking of idle periods, calculation of idle-time percentages, and issuing idle-time notifications to agents.
- Automated generation of productivity reports, furnishing actionable insights into contractors’ time utilization.
- Recording attendance and punctuality records.
- Oversight of the applications and websites accessed by employees.
It’s worth noting that some BPO pricing agreements may already incorporate time-tracking features. The diligent monitoring of productivity levels aids in identifying agents with excessively long work hours and fosters a healthier work-life balance.
In cases where productivity levels are suboptimal, team leaders and managers can delve into the root causes, offer additional training to struggling team members, or institute incentives to drive higher productivity.
5. Poor Team Communication and Management
Not communicating, or not communicating enough, is one of the most common BPO challenges. According to a survey from UpCity, 21% of respondents stated that communication difficulty is the biggest challenge of working with an offshore third-party team.
Poor communication happens even if both parties speak the same language, simply because they unintentionally offend or fail to understand each other due to a lack of cultural knowledge. Both teams have different backgrounds, experiences, education, and their own perceptions.
Solution: Implementing continuous interaction and keeping communication channels open
Communication should be present across the workflow. Integrate feedback loops, video calls, and other communication techniques.
You cannot hold a meeting in one room because of the external team’s distance. That is why maintaining good relations in other ways is important. Setting up a videoconference instead of a phone call or several messages improves your connection with the third-party team.
Making all the employees feel respected and giving them a sense of belonging are imperative. Seeing each other on a video call promotes camaraderie.
The Bottom Line
Whether you’re thinking of BPO payment processing, customer service, or farming out IT functions, outsourcing poses challenges that make adopting a business strategy difficult. Fortunately, you can implement certain solutions to overcome the problems and take full advantage of outsourcing.
Selecting a BPO company that you can trust and having an in-depth discussion regarding potential challenges are crucial. A reputable outsourcing provider has positive client reviews, sufficient references that certify their expertise, and a dedicated team that assists you every step of the way.
Looking for the right BPO company? Let’s connect so that we can build you a dedicated team of experts and deliver the best results.
