Unveiling the Mechanics: Decoding the Inner Workings of Outsourcing

Companies usually do not hire employees for tasks outside their core competencies. When start-ups lack resources, they employ services from business process outsourcing (BPO) providers. They choose to outsource experts in information technology (IT), finance, etc., to perform tasks that their current employees cannot handle.

Outsourcing business processes to companies provides competitive advantages and saves time and effort. It may seem daunting, but the right BPO provider makes everything run smoothly.

Let us explore how outsourcing works and the future trends in BPO.

Understanding BPO and How Outsourcing Works

To start, what is BPO? It is when companies hire specialized third-party providers to perform tasks for increased efficiency. One of the reasons client companies outsource business functions is that BPO providers offer considerable cost savings. These organizations have different compensation structures for employees, leading to cheaper labor. 

For effective outsourcing, businesses should prioritize building business partnerships, logistics networks, and a trusting relationship with the BPO provider.

Including an exit clause in the service contract is also a good strategy; both parties understand when the agreement expires. It helps guarantee that all involved maintain their end of the bargain and stay engaged throughout the contract period.

Here is a closer look at how outsourcing works.

Identifying Your Goal

Learn the problems you need help with and the functions your in-house team cannot accomplish. Clarify your objectives to ensure you and your hired service provider have the best possible experience. Having a definite goal makes finding the right BPO partner easier.

Here are common goals for outsourcing:

• Scaling the project to increase and decrease staffing as needed
• Enhancing company’s focus on core competencies
• Accessing world-class capabilities
• Gaining specific expertise for functions that are currently unattainable or time-consuming
• Freeing internal resources for other purposes (for example, research and development or collections)
•  Sharing costs and risks with a third party

Determining the Types of Outsourcing Services Required

Consider time zone differences, timeline, pay rate, and project size. These factors are essential when deciding the types of outsourced services you need (i.e., offshore, onshore, or nearshore outsourcing).

Businesses outsource various functions. Here are the most common ones:

• Accounting and finance. This outsourced service is ideal for small and medium enterprises (SMEs). Outsourcing your accounting needs to specialists lets you devote time and focus on more pressing business concerns.

• Customer support. The quality of your customer support impacts your sales. An unhappy customer may cause you to lose multiple business transactions. Customer service is demanding, so outsourcing the job will take the pressure off your shoulders.

• Sales. This function is crucial because you will not meet your target profit if you cannot close deals. It also requires specific competencies. Your best move is to outsource sales and have third-party agents make calls on your behalf, or design a sales funnel to boost conversion.

• IT and help desk support. IT commands a large portion of BPO. When you outsource IT services, you get a strong online security infrastructure created and managed by experts, among other benefits.

• Human resources. Maintaining an internal human resources (HR) department is costly. HR outsourcing gives you a more affordable and efficient option. BPO providers have a pool of competent recruiters and provide a full spectrum of HR services.

Listing Potential Vendors

You can search online for potential partners. List five to seven BPO providers and look for reviews or testimonials about these companies. You can also ask for recommendations from people you know who have worked with BPO providers before. Afterward, you can short-list prospects before deciding on the best vendor that suits your needs.

Here are the qualities to look for when choosing potential vendors:

• Results-oriented culture. The BPO firm must focus on helping you achieve the desired results. When outsourcing sales, the BPO provider must be able to help you close deals and not just place or answer calls.

• Extensive experience. Knowing the BPO company’s history and experience is crucial when selecting a partner. After all, the longer the firm has been in operation, the more industry experience it has.

• Robust cybersecurity and risk management capabilities. When choosing a BPO firm, you must ensure it has strong IT security systems and policies. Risk management is also integral. The provider must have clear protocols for identifying risks that may lead to lost data and assets for your business.

• Cost-effective programs. An exceptional BPO provider can offer optimum value for your money with competitive pricing, efficient service delivery, and guaranteed results.

• Compatible business competencies. Finding a firm whose core competencies match your goals, processes, strengths, and standards is good. You and your BPO partner should also agree on deliverables and timelines, project expectations, success metrics to monitor, and assessment methods.

Managing Your Chosen Partner

After making your final decision, you can contact the BPO provider and book a consultation with them. This meeting is your opportunity to present the specialized skills you require and determine if they have what you are looking for. You and your potential BPO partner must be on the same page about the project, pricing, contract stipulations, timeline, etc., to minimize hurdles.

Once you have finalized the outsourcing contract, here are some steps to take to launch your outsourcing project:

• Create a JD and define your KRA. You must provide your BPO provider with a detailed outline of the kind of talent you need and the tasks they must complete. Write a job description (JD) and a key results area (KRA). The JD outlines the skills you need and their tasks. The KRA describes how well you want the tasks to be completed.
• Develop a training plan. The third-party team will need training about your company’s inner workings. So you must be clear about your training goals and how to deliver them. Without investment in training, the external team may not meet your expectations.
• Manage your offshore team. The set-and-forget management style does not work with an offshore team. You must develop a practical management framework within your company that you will consistently use to manage third-party staff.

Principles of Successful Outsourcing Implementation

Now that you know how outsourcing works, let us discuss how you can successfully implement it. Whether onshore or offshore BPO, the key to a successful outsourcing implementation is a good relationship between you and the BPO provider. Thus, it is important to follow the listed principles.

• Goals and achievements. You and your BPO partner must set practical goals to sync your game plans. The project goals must be feasible, and expectations should be direct.
• Communication. Facilitate a safe space so team members can voice their opinions honestly and report developments to each other. Good communication ensures that everyone is on the same page to reach their objectives. You and your BPO partner should be able to contact one another quickly.
• Review and analytics. Having regular and frequent formal review meetings is highly recommended so that you and your BPO partner can update one another on goals achieved or problems encountered.
• Trust. You and your BPO partner should always be honest and transparent to build trust and confidence. All operations should be open to both of you, and you must have an equal share of power and responsibilities.
• Analytics and reviews. It is best to have access to analytics and have regular review meetings. Regular reviews help bring both parties up to speed about the project’s progress, team achievements, obstacles, and current deliverables.

Future Trends in Outsourcing

Today’s outsourcing landscape has evolved faster than ever. It is one of the fastest-growing industries despite various global challenges. The worldwide outsourcing market value was $261.9 billion in 2022. It will continue to grow at a 9.4% compound annual growth rate (CAGR).

Outsourcing firms navigate the market by adapting to trends and future outlooks. Here are some trends that may impact outsourcing in the coming years:

• Cloud computing. The demand for cloud computing continues to rise as data storage requirements increase. Cloud solutions streamline outsourcing processes for providers and clients alike. Some outsourcing tools are cloud-based technologies, such as contact center as a service (CCaaS) platforms.

• Robotic process automation (RPA). Outsourcing providers are investing in RPA technologies. RPA automates internal and external processes. RPA can automate up to 70% of rule-based processes, reducing routine and time-consuming tasks.

• Partnerships for strategic growth. Partnerships are increasingly important in the outsourcing industry. Consequently, skills are more valuable than mere cost-cutting. Outsourcing vendors build global teams to ensure seamless collaboration.

The Bottom Line

Outsourcing is a lifesaver for companies lacking the resources to perform functions in-house. It is also ideal for those intending to hire experts without undergoing rigorous employment processes for a full-time worker.

Understanding how outsourcing works is the first step to reaping its benefits. After choosing a BPO collaborator with the help of the steps above, clients must draft a win-win contract that outlines each party’s responsibilities.

Looking for a reputable BPO firm? Let’s connect to discuss a solution that fits your needs.