What BPO Companies Can Do for Your Business
Often organizations think of BPO (Business Process Outsourcing) synonymously with offshore outsourcing. However, there are distinct differences. Certainly, as their names imply, both are a form of outsourcing. To further complicate matters there are Third-Party Service Providers, who may, or may not be offshore and who may or may not be considered as BPO. Let’s get our definitions straight:
- Offshore outsourcing is the practice of hiring an external organization to perform some business functions in a country other than the one where the products or services are actually developed or manufactured.
- Business process outsourcing (BPO) involves the contracting of the operations and responsibilities of a specific business process to a third-party service provider. The third-party service provider may, or may not be offshore.
- A Third-Party Service Provider (TPSP) is a company that provides organizations with specialized outsourcing services such as consulting, legal, real estate, education, communications, data storage, data processing, and many other services.
Perhaps because offshore outsourcing originated with manufacturing firms, such as Coca Cola, which outsourced large segments of its supply chain in order to cut costs, offshore outsourcing still remains the bastion for many large manufacturers who seek to cut costs. Unfortunately, this offshore cost cutting may come with quality control problems, and sometimes outright health hazards for consumers:
- As recently as January, 2015, CBS News reported that Petco had removed all Chinese-made dog and cat treats from its website and stores nationwide because of concerns they have sickened thousands of pets and killed more than 1,000 dogs in the U.S. since 2007.
- In March, 2015, a "60 Minutes" report found that some of Lumber Liquidators Chinese-made flooring had higher-than-allowed levels of formaldehyde, a chemical known to cause cancer, causing Lumber Liquidators stop selling laminate flooring from China, even while they deny allegations.
- Outside of the manufacturing arena, some companies opt to send customer’s calls to an offshore call center. While direct health hazards are not likely to occur, many customers can attest to higher blood pressure as a result of language barriers, scripted responses and the knowledge that saving money is more important to the company than customer support.
In so called “white-collar” businesses, most successful outsourcing stays in-country, oft-times with a co-located regional BPO or TPSP. BPO is typically categorized into back office outsourcing, which includes internal business functions such as human resources or finance and accounting, and front office outsourcing, which includes customer-related services such as contact center services.
Benefits of Outsourcing
It’s important to understand the outsourcing is a way to make your non-core processes leaner, smarter and faster, while reducing costs. Outsourcing is not about what you can subtract from a business, it’s about what you can add. Some of the benefits you may see from outsourcing include: