Exploring Global Delivery Models in the Dynamic BPO Industry

Companies seeking increased productivity, enhanced service quality, and reduced expenses rely on business process outsourcing (BPO). This practice offers access to a diverse talent pool and emerging technologies to help streamline operations and achieve cost-effectiveness.

BPO presents global delivery models to suit various business needs, preferences, and budgets, with each framework offering unique benefits and drawbacks.

If you are considering outsourcing but do not know which model to choose, this article is for you. Continue reading to learn about BPO global delivery models and their impact on your business.

Global outsourcing delivery models and their impact

Tapping into third-party resources and solutions allows companies to lessen the burden of handling non-core functions. BPO lets them prioritize their primary competencies for enhanced products and services while optimizing operating costs.

Businesses across industries outsource to boost their daily productivity. Because of demand, the global BPO industry gained $280.64 billion in revenue in 2023. The market is expected to expand further as it offers the increased flexibility, savings, and service quality that clients seek.

However, understanding the different BPO global delivery models is crucial before maximizing such advantages. Doing so enables you to address potential disadvantages and ensure a positive return on investment (ROI). Check your options below before signing an outsourcing contract. 

Onshore delivery

Onshore delivery is hiring a BPO provider from your home country. This model fosters a close working relationship between the third-party and in-house teams. Suppose your business is in Arizona; your provider can be in Virginia or other U.S. states. The proximity offers a unique set of benefits and drawbacks.

Here are the advantages of onshore delivery:

• Shared language and culture minimize misunderstandings and conflicts of interest.
• Proximity enables easier in-person interaction and collaboration.
• Onshore providers adhere to data privacy and security regulations in your local area.
• Working with local BPO companies reduces time zone challenges and prevents delays.

Meanwhile, the disadvantages of this model are as follows:

• BPO and in-house labor costs are similar when both parties operate in the same region. Onshore outsourcing is more expensive if the provider is from a developed country.
• Onshore service providers might have a smaller local talent pool for specialized skill sets than some offshore BPO vendors.
• Due to availability and cost, clients might encounter challenges when quickly scaling the onshore BPO team’s size to match the workload.

Onshore delivery is ideal for companies that want robust information security and on-site engagement. These include the finance, healthcare, and legal service industries, which require stringent adherence to policies and procedures to safeguard sensitive financial accounts, medical records, and personal data. 

Nearshore delivery

What is BPO’s nearshore model? This framework refers to contracting support vendors from neighboring countries with similar time zones and cultural backgrounds. For instance, a U.S.-based company hires a BPO firm from Mexico, which is only across the border.

The model best suits U.S. businesses targeting consumers nationwide and Latin American (LatAm) countries. They can hire LatAm-headquartered BPO call centers capable of providing bilingual customer service to accommodate English- and Spanish-speaking customers.

If you decide to contract a Mexico-based provider, note that the Mexican government reformed its outsourcing regulations in 2021. Although the law does not outright ban BPO, providers can only provide specialized services.

However, statistics show that service providers would experience an up to 60% surge in their payroll costs because of the massive workforce internalization. As a result, client organizations, such as yours, might also encounter higher labor rates when hiring Mexican support agents.

Offshore delivery

Offshore outsourcing is the most popular BPO delivery model due to its significant cost advantage. Service providers usually come from Asian countries, such as the Philippines and India, which have considerably lower labor costs than your home country.

For example, employing a software developer from the Philippines costs ₱228 or $4 per hour. Meanwhile, recruiting a counterpart from the United States requires your business to pay about $54 an hour.

Besides increased cost savings, offshore BPO offers access to a broader, English-proficient talent pool, enhanced scalability, and 24/7 support due to time zone optimization.

Despite these advantages, this delivery model introduces the following risks:

• Time zone, linguistic, and cultural differences create barriers to communication and collaboration. If not correctly addressed, these hurdles can result in misinterpretations and interruptions.
• Because transactions mainly occur online, sensitive information is prone to cyber threats. Data privacy laws might also be less strict in offshore locations than in your home country.
• Considerable physical distance makes it more challenging to maintain close oversight and collaboration with the offshore BPO team. Establishing strong working relationships and clear communication channels is crucial.
• The remote nature of offshore outsourcing might lead to quality control issues. Achieving desired outcomes requires carefully selecting a reliable BPO company that matches client strategies and abides by critical legal regulations. 

Hybrid delivery

Hybrid delivery combines two or more traditional BPO global delivery models discussed. This strategy lets your business leverage the strengths of each approach to improve flexibility and achieve optimal results.

Here’s what you can gain from the hybrid model:

• Balance cost reduction and operational efficiency.
• Utilize diverse tech and human resources (HR).
• Easily adjust team sizes in your company branches worldwide.
• Maintain control over critical tasks with an onshore team. 
• Enjoy cost savings on routine processes handled offshore.

Handling project teams from different cultures necessitates extra effort to bridge communication gaps and align work styles. Overseeing them across global locations also demands robust administrative techniques and additional resources. Ultimately, your enterprise must carefully understand varying data security protocols to ensure regulatory compliance.

Captive delivery

The captive delivery model stands apart from the previous approaches. It involves setting up your own BPO hub in a foreign country to use a specific talent pool or cut labor costs. You have complete control of this center, from recruitment to administrative functions.

However, it requires a significant upfront investment in HR, tech infrastructure, legal compliance, and real estate. To avoid wasting resources, time, and effort, you should perform a thorough cost analysis before adopting this model, weighing its benefits against its potential pitfalls. 

How to optimize BPO global delivery models with technology

The global business landscape constantly evolves. Its fast-paced nature challenges businesses to expand operations and meet fluctuating market demands. To attain cost efficiency, consider these strategies to utilize BPO models with advanced technology:

• Use artificial intelligence (AI) and machine learning (ML) to identify in-house inefficiencies and speed up BPO investment decisions.
• Implement robotic process automation (RPA) to streamline repetitive and tedious non-core tasks.
• Deploy cloud-based solutions for seamless communication, secure data sharing, and real-time collaboration over the internet.
• Employ robust cybersecurity platforms and protocols to protect confidential information against online threats and breaches.
• Leverage data analytics tools to monitor the BPO team’s performance, output quality, and overall contribution to your business.

The bottom line

The BPO sector features global delivery models that present varying ways to support your daily operations. However, these models also have diverse risks that can overshadow the benefits if left unaddressed.

You need a well-structured outsourcing investment plan to maximize the advantages and minimize the disadvantages. Merging human and tech capabilities further helps optimize your chosen BPO delivery model.

Let’s connect if you seek a trustworthy service provider to meet your onshore, nearshore, or offshore outsourcing needs. Unity Communications has offices in the U.S., Mexico, and the Philippines, ready to boost your productivity at competitive pricing.