Business process outsourcing (BPO) is a strategy that can help you reduce costs, improve efficiency, and access specialized skills. But what if your BPO costs are skyrocketing and you need to find a solution? Here are some steps you can take to analyze and optimize your BPO spending.
The first step is to identify the root causes of your BPO cost escalation. There could be many factors, such as poor performance, scope creep, contract issues, currency fluctuations, or hidden fees. You need to collect and analyze data from your BPO providers, your internal teams, and your customers to pinpoint the sources of inefficiency and waste. You also need to review your contracts and service level agreements (SLAs) to see if they are aligned with your expectations and goals.
Firstly I need to understand the particulars where cost is involved and identify the utility and Efficiency of the factors, then do the SWOT analysis on the particulars, start working on the thing where cost optimization can be done with exploring alternative solutions.. cost optimization should be done keeping the short term and long term prospective. Keep eyes on input vs output analysis. Efficiency, occupancy, utilisation tracking are also very important aspects. It is not just related to human resources it is also related to tech/campaigns/rostering/alignments/SOPs/verticals/departments. Research on competitions strategy also very important. Dip check of the SOPs and process also very helpful in cost optimization.
In my experience cost cannot escalate automatically, its function of the how the contract was drafted. Cost inflation can happen only basis, COLA or annual hikes put in the contract. If ROI is a concern, there needs to be a deep dive on data, invariably it will require course correction around people or processes.
A couple of things which I can recommend first hand - 1) Tech integrations to deliver best of the efficiencies like just an example - your Quality control can be moved to Conversation Analytics tool which can help you reduce your QA costs significantly 2) Constantly look out for a place where you can implement more self-serve options 3) Look out for a better place of delivery like a smaller town, work for home ... Both has its own flip side as well 4) Deep dive into data to figure out leakages like AHT efficiency, concurrency, occupancy levels etc.
To analyze escalating BPO costs: review invoices, categorize expenses, identify cost drivers, compare budget vs. actual, assess resource utilization, evaluate service levels, engage stakeholders, communicate with BPO provider, benchmark against industry standards, and identify optimization opportunities.
This step is critical - what is causing the cost increase. Any action must have this context. Also - consider how you calculate cost. Is it cost per incident, overall cost to serve, cost per unit sold etc. As part of this understand if increased cost is being driven by increased demand (eg problems with your product/service offering) or change in issue types leading to longer solution times etc. Again, this context is critical if you are to plan an effective solution.
The next step is to negotiate with your BPO providers to find ways to lower your costs without compromising quality. You can ask for discounts, rebates, or incentives based on your volume, loyalty, or performance. You can also renegotiate your contracts and SLAs to adjust the scope, terms, or pricing of your BPO services. You can also explore alternative delivery models, such as shared services, hybrid outsourcing, or cloud-based solutions, that may offer more flexibility and scalability.
The primary objective of engaging a BPO provider is to delegate non-core activities, allowing businesses to focus on their core functions. However, there are instances where costs may appear prohibitive, such as fluctuations in revenue during peak and off-peak periods. Exploring a volume-based incentive structure with your BPO provider can be mutually beneficial in such cases. This collaborative approach ensures that both parties are satisfied, fostering a win-win scenario.
Having worked on both sides of the fence, I don't believe in price negotiation, you should be clear on your budget. I thinks it's unfair to keep juicing out BPO partners, what is the harm in paying the fair price, everybody knows what the industry benchmark is. Instead of looking for a low cost vendor you should look for a high value partner.
The third step is to optimize your processes and workflows to eliminate redundancies, errors, and delays. You can use tools and techniques such as process mapping, automation, standardization, and lean management to streamline and improve your BPO operations. You can also implement best practices and benchmarks to measure and monitor your BPO performance and outcomes. You can also seek feedback and suggestions from your BPO providers, your internal teams, and your customers to identify areas for improvement and innovation.
This is one of the best approach in order to optimize the cost and also show some value adds. Know the process throughly build a team who can bring in problem statement and area which can be addressed to reduce work and getting it done faster with less resources. Automation is the key these days it comes with lot of benefits. But this is only possible by having right mindset team who can work towards solution.
One of the best ways to reduce costs is of course to reduce problems, or solve them earlier eg remove the problems from the product/service/process, easy to use self help, simple process for agents to follow etc.
Streamline operations by optimizing processes and workflows to eradicate redundancies, errors, and delays. Utilize tools like process mapping, automation, and lean management for efficiency. Implement best practices, benchmarks, and seek feedback for continuous improvement in BPO operations.
The fourth step is to diversify your BPO portfolio to reduce your dependence and risk on a single provider or location. You can use a multi-sourcing strategy, where you split your BPO functions among different providers, to leverage their strengths and capabilities. You can also use a global sourcing strategy, where you distribute your BPO functions across different regions or countries, to take advantage of cost, quality, and availability differences. You can also use a contingency plan, where you have backup providers or in-house options, to cope with emergencies or disruptions.
In my opinion, multi-sourcing is the best option especially if you are outsourcing for the first time. You will get to learn a lot in the process and take an informed decision later on.
There is often a race to the lowest possible cost per agent/minute etc. This can be incredibly effective, but quality matters. Low cost and poor service is costlier in the long term due to customer churn. Invest heavily in training, support and feedback loops with your BPO when launching a lower cost (or any) new site.
The final step is to evaluate your BPO strategy to see if it is still aligned with your business objectives and needs. You can use a SWOT analysis, where you assess the strengths, weaknesses, opportunities, and threats of your BPO model, to determine its viability and value. You can also use a cost-benefit analysis, where you compare the costs and benefits of your BPO model, to determine its return on investment and impact. You can also use a gap analysis, where you compare your current and desired state of your BPO model, to identify areas for change and growth.
A strategy to mitigate costs is to explore resource sharing or outsourcing part-time roles to the BPO provider. Businesses can reduce expenses by leveraging shared resources or allocating part-time responsibilities without compromising quality or service. This not only decreases costs but also minimizes any adverse impacts on the BPO provider, as resources can be efficiently utilized across multiple projects.
é sempre importante avaliar o processo de uma estratégia inicial visto que com o decorrer de uma jornada em um projeto certas situa??es acontecem de forma imprevisível. Ent?o realizar compara??es iniciais junto com as atuais podem ajudar criar uma terceira vis?o para mudan?as.
Contractually aim for very few but critical achievable goals. Don't make up goals like current +20% as that’s BS - if you don't have a plan to achieve a goal, don’t go above reality. Support your BPO to innovate, experiment and engage fully to drive improvements. Their expertise and experience with your customers is key to customer retention.
Based on how long the problem has persisted and its trajectory, you can approach this with various strategies: Traditional Solutions: Analyze contracts, compare providers, optimize processes with the current provider, negotiate rates and terms, and consider in-house services. Innovative Solutions: Implement AI-powered solutions to automate tasks, use hybrid BPO models, performance-based contracts with providers, crowdsourcing for talent, blockchain for transparency, data analytics for cost-saving, and remote workforce management. Disruptive Solutions: Explore DAOs, replace human tasks with Robotic Process Automation (RPA), build a freelance network in emerging markets, use outsourcing on demand, and microtasking platforms.
You need to find a new client and a new investor. There's an urgent need to increase production and sales of course. Make sure everyone is productive and always present and working.