Business Process Outsourcing (BPO)… Explained in detail…
Garry Steele
Solving the UK's staffing challenges | UK Head of Business Development | Alpha BPO
In this article we have covered off several typical questions about BPO… and how Alpha BPO manage this with their clients.
And the topics covered include:
At a high level, what is BPO?
BPO (or Business Process Outsourcing to give it it’s full terminology), is where specific business operations of an organisation are undertaken by resources provided by a third-party company.
And the goal of BPO? Well, primarily it is to improve business functions and increase efficiency – both in productivity and cost savings.
Back in the day, BPO was originally associated primarily with manufacturing firms, that outsourced large segments of their supply chain, but now BPO spans numerous business sectors and services.
And today, many companies now adopt BPO practices to help them in the two main business areas of back-office and front-office operations.
Back-office BPO involves contracting their core business support operations, including general administration, accounting, payment processing, IT services, human resources, regulatory compliance, and quality assurance, through to outsourcing professionals - who ensure the smooth running of these business operations. This approach helps companies to improve their efficiency and quality and overall performance whilst reducing costs.
By contrast, front-office BPO tasks commonly include customer-related services such as technical support and sales and marketing. These services help companies to improve the customer experience for their customers and maintain a competitive edge in their market.
What types of scenarios does BPO add the most value / what problems does it solve?
It’s simple really, outsourcing helps organisations leverage the power of a globalised workforce and ‘talent pool’ to create value for their customers and shareholders. But very often the real value of this service is underestimated. Essentially, it’s about finding the right resources with the right skill sets and in the required timeframe whilst still trying to meet their goals and objectives.
Organisations typically outsource business processes that are essential to daily operations but sometimes don’t need to be executed directly. Functions such as general administration, customer service, technical support, sales, channel partner engagement and financial processes are typical of this list. However, organisations often find it problematic to find and recruit people to undertake the roles required, and in the timescales they are needed.
Organisations know that many of these processes can be executed far more efficiently by a specialist company that can provide the people, processes and technology required, and often more easily and effectively than the way they could be executed internally. So, when companies partner with the right BPO vendor, they know they will benefit from their economies of scale and achieve significant cost savings.
In today’s market, every single investment decision a company makes needs to deliver a defined value outcome. So, when it comes to BPO, organisations need to meticulously weigh the metrics that determine which activities should be done in-house and which ones should be outsourced. Typically, organisations will evaluate the cost of a task fulfilled in-house and then compare it to a relative cost offered by a BPO partner.?
And to keep it simple – BPO can help resolve recruitment issues, business operations issues, time issues and cost issues.
What are some of the common misconceptions about BPO?
Myth 1: Loss of Control and Quality:
Myth 2: BPO is Only for Large Corporations:
Myth 3: BPO is Only for Cost-Cutting:
Myth 4: BPO Leads to Job Losses:
Myth 5: BPO is Limited to Call Centres:
Why do companies outsource?
Outsourcing provides additional assistance for both small and large companies wanting to grow their organisation with fewer expenses. By outsourcing different elements of their business, companies can leverage specialised expertise, reduce costs, and focus on their core business functions.
Indeed, according to a recent report by Deloitte, some interesting analysis showed that whilst 59% of companies outsource to minimise expenses, some 57% also do it to focus on core business functions.
Outsourcing can help companies leverage knowledge and skills across their complete supply chain. It can also help to make their business more flexible and agile, and better able to adapt to changing market conditions and challenges.
Ultimately, outsourcing will help to deliver service level improvements whilst also reducing the cost structure and overall operating costs.
How should companies start the process?
Before going down the outsourcing path, it is essential for companies to get internal buy-in to this process. Without this, there will always be internal disputes as to whether this is the right strategy for the company, and the biggest loser in all of this will be the third party outsource partner the company has chosen who will always be on a ‘hiding to nothing’.?
The ‘key’ 5 steps to secure buy-in for business process outsourcing
Just knowing that it’s the right decision to go the BPO route for your business operations won’t do any good at all if you can’t get leadership to sign off on the idea. Having said that of course, it may well be that any internal discussions around BPO are already being driven ‘top-down’ – or in other words, it’s the senior management of the organisation that are driving this.?
But whether the process is being driven ‘top-down’ or ‘bottom-up’, the principal of getting ‘buy-in across the organisation is critical to the ultimate goal of this succeeding.?
So, here we go:
1. Determine what you plan to outsource
One of the key advantages of BPO is that you have many options for how you plan to divide the work between your internal teams and your BPO vendor. To help determine what the best breakdown here for your organisation is, think about what is creating your biggest ‘pain’ points are.??
For example:
Equally, you might find it useful to think about two typical reasons why companies might outsource, and these are:?
?? Outsourcing to optimise – which is where you are typically looking to streamline your business operations and increase efficiency across the board. Going this route would typically mean outsourcing certain business departments or channels, handling specific types of issues better, or being able to offer an extended time coverage outside of normal business hours.
?? Outsourcing to expand – which is where you are typically looking to develop and extend some of your internal teams to cover a new product or service offering, or even perhaps open a new office to extend your geographical reach. You would choose this option when it simply doesn’t make any business sense to try covering such expansion with your in-house team(s).??
Still, having trouble determining whether you should (or shouldn’t!) outsource? For example:?
It’s also a good idea to remember that outsourcing isn’t a negative. In most cases, working with a BPO vendor means working with a specialist who is exceptional at what they do.?
With that type of team on your side, great customer services and experiences are sure to follow.??
2. Start initial internal discussions about BPO
Now, regardless of who is ‘driving’ this, it is critically important to back up any ideas of outsourcing with facts and numbers. A key part of the process is to illustrate the tangible benefits of working with a BPO specialist.?
The best initial approach is to introduce the whole concept of outsourcing by listing some of the overarching reasons why it’s such a good idea. And the most cited benefits of outsourcing are:?
The important thing is to not get discouraged if there are some initial pushbacks from certain areas or individuals. Change (or the fear of change) is always the most important consideration, and this needs to be handled delicately.?
In fact, you should always anticipate having to address some misconceptions. Everyone in business will have their own views, whether this is real or just some ‘third party’ comment or what someone has ‘heard’. Every objection needs to be taken on board and responded to. The worst thing of all is if someone feels they are being ignored or their concerns are being ‘swept under the carpet’ and just not taken seriously.?
3. Make a formal business case for outsourcing
Once everything is in place, and the arguments for have made and accepted, at the very least for the overall concept of outsourcing, then it’s time to make a business case. This will probably involve giving a formal presentation with plenty of data to support your arguments. This can often be done with your proposed outsourcing partner – and this is where Alpha BPO will work studiously alongside you. Just remember, the rationale of this business proposal is the most important aspect. And this is where you might want to start.?
Since you may have already chosen one of the two likely paths above - outsourcing to optimise or outsourcing to expand - explain how you arrived at your decision. If you’re launching a new division or product line for example, make it clear that this is unfamiliar territory for your internal team and detail the training and resources it would take to get them up to speed. You can then contrast that with how much more cost effective and efficient it would be to launch that new part of the business through outsourcing.?
Of course, you need concrete numbers to back this up. You can run calculations yourself by making some safe assumptions. For example, it’s generally accepted that your internal hourly / daily rates for staff is about two to two-and-a-half times more expensive than an outsourced partner’s base hourly / daily rate because of the costs associated with benefits, equipment, training, facilities, pensions and more. And… the rates a BPO provider charges also covers all expenses.??
You can usually pretty quickly come up with a good estimate of your potential cost savings going this route, but there’s an even better option. Just talk to us at Alpha BPO, and we will be more than happy to provide you with a comprehensive proposal based on your detailed requirements and leveraging your actual numbers.?
If you present a compelling proposal on how an outsourced solution is going to benefit your organisation, then regardless of who is ‘driving’ this proposal, the company and the decision makers will quickly come around to the idea. ???
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4. Talk to the internal teams about working with a BPO specialist
Once you have buy-in from company leadership, then it’s about involving the internal teams more on what this is all about, how all this will benefit them and what the future is going to look like. The last thing you want is start these discussions internally at the eleventh hour without having involved them as part of the ‘buy-in process. It is very easy to alienate staff by introducing new systems and processes without their knowledge.??
So, how do you bring up the topic of outsourcing without causing alarm? It’s all about how you frame it, so choose your words carefully. Instead of immediately jumping into how you’re going to begin working with a vendor to help the company, start off by assuring them that their jobs are safe. Then, make sure they understand that outsourcing isn’t a negative thing - it has nothing to do with them underperforming or failing to deliver exceptional service.??
After these initial conversations, it’s important make sure to explain how working with a BPO provider can help to future-proof the organisation and ultimately benefits them.?
This will depend a bit on what exactly you’re planning to outsource of course. But for example, if you’re outsourcing to expand operations into a new region, you might tell your team that this alleviates them from having to learn new cultural norms and working odd hours.?
Equally, if you’re outsourcing (let’s say) a particular repetitive administrative process, let staff know that they can now focus on issues that warrant their attention more than simple, tedious requests or problems they might not be currently equipped to handle.??
Whatever the case, make it clear that leveraging a BPO vendor means they can focus on the things they’re knowledgeable about and enjoy doing.??
It’s also a good idea to talk about what will happen next. Go through what onboarding will entail so your teams understand what to expect. Talk about how the BPO resource agents will be trained, what tools they’ll be using, and how they’ll fit into the overall structure of your company.?
It’s all part of change management. And if you do it right, it will also ensure that the new BPO resource agents will just feel like an extension of your already awesome team once they start – they’ll just be physically located elsewhere.??
5. Get approval from all relevant stakeholders
You’re in a good place once you have leadership and your internal teams on board with your outsourcing recommendations. Now, you can set your sights on getting approval from all other stakeholders within the company. After all, making the move to working with a BPO vendor will affect nearly every department across the organisation.??
Consider your IT department, for example. They will likely have a lot of questions about security protocols and how you’ll ensure that the BPO vendor has access to only the information they absolutely need.??
Including them in the conversation early ensures that you’ll ultimately craft a contract with a BPO vendor that covers any potential concerns they have about data and system protection.?
You’ll also need to go through this process with all other relevant departments, including finance, sales, and legal. Think of these discussions as opportunities rather than hurdles. Your colleagues who work in other areas of the business will be able to bring up concerns you may not have considered.?
The result? You’ll end up crafting a contract that truly meets the needs and expectations of the whole company.
Once you have approval from all key stakeholders, you can officially proceed with the outsourcing project as outlined.?
There are more steps along the way but give yourself a well-deserved pat on the back for getting to this point. You’ve earned it.??
Make outsourcing work for you
Once you have approval to pursue an outsourcing project, with a vendor like Alpha BPO you can start thinking about how to ensure that your future BPO resource agents will really feel like they’re an integral part of the company, and not just sitting on the outside.?
And believe it or not (as Alpha clients will attest), making your outsourced team feel like a true part of your company will go a long way toward ensuring a successful relationship — not to mention keeping your own customers happy. Everything from the training you provide to the ways you incentivise good performance can drastically affect BPO resource agents’ morale and overall job satisfaction.?
What makes South Africa different?
South Africa has been voted the most favoured offshore BPO destination since 2021, according to the annual Ryan Strategic Advisory Front Office BPO Omnibus Survey of more than 600 executives from eight key sourcing markets, including Australia, Canada, France, Germany, Italy, Spain, the UK and the USA.
Alpha BPO is headquartered in Durban, South Africa, with a provincial office in Cape Town, and provides professional outsourcing services to a wide range of industries globally.
Durban has been one of the leading locations for manufacturing and trade purposes, and this has contributed to its growth as an international BPO location. It is characterised by a large talent pool combined with low cost.
The South African population (especially Durbanites) have a very neutral accent, which means that the UK population is receptive to speaking to individuals from South Africa, and in particular, Durban.
With offshore outsourcing companies, time zone differences can often be a problem, but Durban in South Africa is only 1 hour ahead of the UK Summertime, and only 2 hours ahead of UK GMT – and thus has very similar business hours to the UK.?
What makes Alpha BPO different?
Alpha BPO currently work with many existing clients across the UK, South Africa, Australia, and the USA by providing them with relevant outsourcing services that have helped to resolve their requirements and ease their resource needs.?
At Alpha BPO we recognise that with every client, whilst they may be in either similar or even completely different business sectors, the way we work with them will always be specific and unique to them.?
As such, every client is different of course and their reasons for looking at outsourcing is different. Typically, clients require a range of different expertise and skills from different resource agents to support them - which is why we treat every client on an individual basis.?
What does engaging Alpha BPO look like?
By working with Alpha BPO, we can help companies resolve their current resource challenges (whether they’re looking to diversify - or expand and grow - or just trying to find the staff they need to fulfil their current needs).
More importantly we don’t have a resource labour ‘pool’ that any client can have access to. The resource agents we recruit work exclusively for our clients – and thus they will operate transparently as an extension of the client’s own team - working alongside their current operation. They just happen to be physically located offshore.?
We work very closely with all our clients – and we work hard to fully understand their business and to assess their needs and requirements in considerable detail – thus ensuring that we only recruit people with the required skills that will fulfil all their requirements.?
To that end we also work very closely with their HR department to ensure that job specifications etc are jointly agreed before we commence the search process.?
What are the typical costs and ROI of engaging Alpha?
These can vary considerably as individual day rates for resources will be dependent on the quality, skill and experience of the resources needed to undertake individual business operations.?
However, clients should be able to achieve up to 60% savings in overall Operational Expenditure (OPEX).?
This is achieved because they will see improved cashflows through the reduced investment they have to make into infrastructure and ad-hoc costs such as: office space, IT equipment, systems development, HR recruitment, staff training and absenteeism.?
This also allows clients to free up their internal resources to pursue ‘core’ revenue-generating activities.?
What are some of the best-case studies Alpha BPO has?
In the UK alone, we have over 25 clients ranging across business sectors such as financial services, credit control, legal services, insolvency services and property services and other business sectors.?
Alpha BPO has a track record of truly partnering with our clients rather than just managing and maintaining an outsource relationship. Our focus is always on our operational efficiencies, and we are always looking for opportunities for, and with, our clients.?
We have even gone as far as recommending, integrating and implementing new software for our clients. We have also built bespoke systems for our clients to add operational efficiencies to drive down costs and increase output.?
What are the current trends making BPO more popular?
Trends provide growth, efficiency, and enhancement opportunities in a competitive market. Following a trend can lead businesses to embark on more thoughtful and effective strategies.?
The following are some ‘key’ BPO trends that we have been seeing and that are expected to continue shaping the outsourcing industry in the years to come:?
What challenges will BPO help with in the future?
The challenges that BPO will be able to help with in the future remain consistent, and it is in the hands of outsourcing specialists like Alpha BPO who work tirelessly to address these, ensure the overall efficiency of the services provided to clients is maintained, and essentially is there to ‘make a difference’.?
These challenges that BPO typically help with include:?
Contact Information
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Strathpeffer, Highland, IV14 9DS UK
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