Written by Allie Delos Santos
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 comes with 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 allows companies to discover and utilize skilled global talent, but cultural differences might become a major challenge. Companies face two cultural barriers when outsourcing: corporate and regional.
Why? Corporate disparities develop because outsourcing involves a partnership between two vastly different organizations. Regional gaps arise since the client and the BPO company are typically in separate locations.
Organizational cultural gaps affect different parts of the business. They affect the team’s interaction, interpretation, and understanding and potentially take a toll on productivity and dedication. The risk of misunderstandings and conflicts between two parties increases due to cultural differences.
Solution: Learning each other’s organizational and regional culture
The best remedy for this problem is to design a training program to educate the in-house team about the external party’s organizational and regional culture. Similarly, the BPO company should provide training for its employees that focuses on the client’s geographical and organizational culture.
The first few weeks of the engagement should be about learning to collaborate and work together. The primary focus is on the client’s culture and ensuring the third-party team aligns with its style and 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 the protection of 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. But implementing better retention strategies and work cultures can reduce the attrition rate. 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
Performance management and productivity reporting are some BPO challenges to expect since contractors work outside the office or in offshore locations with different time zones.
Productivity initially measured the ratio of output produced over time, but this fails to accommodate factors such as service quality or the relative difficulty of the work. Measuring productivity should measure time spent and how effectively it was used. This means knowing which metric to use and measuring the performance of the entire workforce.
Solution: Using a project management and time-tracking tool
Various tools are available on the market to track productivity. A project management and time-tracking tool enhances productivity across the board. It lets you perform several functions, such as:
- Monitoring productive hours in a set period
- Tracking idle time, measuring idle time percentages, and alerting agents with idle-time notifications
- Automatically generating productivity reports, providing actionable insights into contractors’ use of time
- Recording attendance and punctuality
- Supervising applications and websites that employees use
The BPO pricing and agreement might already include a time-tracking feature. Monitoring productivity levels helps identify agents with unreasonable work hours and promote work-life balance.
If productivity levels are low, the team leaders and managers can determine the root cause, offer additional training to struggling workers, or incentivize 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.
Enjoyed what you just read? Share it with your network.
About The Author
Allie Delos Santos is an experienced content writer who graduated cum laude with a degree in mass communications. She specializes in writing blog posts and feature articles. Her passion is making drab blog articles sparkle.
Allie is an avid reader—with a strong interest in magical realism and contemporary fiction. When she is not working, she enjoys yoga and cooking.