12 BPO challenges and how to overcome them

As the BPO industry continues to grow, it is inevitable that several companies still face challenges to their success.

BPO challenges are unavoidable for all outsourcing firms as several things can still go wrong despite implementing foolproof strategies and having the best resources available.

However, these obstacles can be prevented with the right solutions. Continue reading to learn how to avoid them.

What is BPO?

Business process outsourcing (BPO) is the act of reaching out to third-party companies to avail of their services.

These services include customer service, marketing, HR, payroll, and accounting. Outsourcing is not limited to one singular aspect of your business.

Companies can use a marketing agency to handle their advertisements. Another example can be outsourcing legal services from law firms.

By reaching out to BPO firms for their services, companies can cut down on costs and focus on their core competencies. It also allows for more flexibility and efficiency.

Inevitability of BPO challenges 

No industry is safe from challenges, and the BPO industry is no exception. It is continuously evolving, and companies need to respond to these changes accordingly.

With the right strategies to address these issues, BPO companies can continue to thrive and adapt to this continuously-developing industry.

12 common BPO challenges and how to solve them

Listed below are the common BPO challenges and solutions to overcome them:

1. High employee turnover rate

High employee turnover is one of the prominent challenges in the BPO industry. According to QATC, on average, the BPO industry experiences a 30-45% turnover rate.

Employees leave for various reasons, such as no room for career growth, negative work culture, insufficient rewards or benefits, or low salaries.

On the company’s end, as more employees leave, the loss will have to be compensated by hiring new employees. This will require a recruitment budget, adding to the company costs.

Having fewer employees also means less manpower to accomplish tasks, which affects overall results and customer satisfaction.

To fix this issue, companies should implement high-retention strategies to reduce turnover rates and entice employees to remain with the company longer. 

Some ways to do this include:

• Rewards and incentives for employees’ hard work
• Improving work engagement through activities
• Opportunities for career growth and development
• Providing benefits and promoting a positive work culture

2. Communication issues

Most BPOs work remotely as their clients and customers are mostly based abroad, so they cannot always meet in person.

Furthermore, there may be misunderstandings or miscommunication since the two parties may have cultural or language barriers. This will lead to confusion and failure to get on the same page.

One way to remedy this issue is to maintain continuous communication through open channels, such as:

• Emails
• Instant messaging
• Video calls
• Feedback loops

Methods like these help keep constant communication and improve the relationship between the involved parties.

3. Difficulty in measuring productivity and performance

Performance and productivity are difficult to track due to contractors being based remotely or in offshore locations with different time zones.

Measuring productivity is usually by calculating the ratio of output produced over time. However, other external factors could affect this, such as difficulty and quality of the work.

Time-tracking and project management tools greatly help determine productivity when working remotely or offshore.

These give you quantifiable data on how long you have worked and the tasks you have done, which you can now easily keep track of.

4. Data security risks 

When working with an external company, there is the risk of revealing confidential information. No company would want sensitive information to land in the wrong hands.

Check Point’s survey revealed that there was a 50% increase in cyberattacks in 2021, emphasizing the need for stricter data protection policies.

One way to address this challenge is by working with reputable companies and creating non-disclosure agreements. Doing so will help protect sensitive information from being leaked.

Additionally, fully vet your outsource partners before reaching out to them. Since not all of them have strong cybersecurity measures, it is best to assess your options and choose the safest ones.

5. Customer attrition

Customer attrition is when the number of customers reduces significantly because they have stopped buying or availing of your services.

Since the BPO industry is also very competitive, customers may choose your competitors over you, or a project may be given to a different company.

Loss of customers is a huge problem for any business as it decreases revenue and increases the cost of finding customers.

The key to solving this challenge is enhancing customer experience. Keeping customers happy and loyal is the only way to guarantee they will return to your services.

6. Change in political climates

Political situations such as protests, wars, and economic changes can greatly impact outsourcing operations.

Depending on the location, these events may cause political turmoil and affect the offshore workers based in that area.

Furthermore, changes in laws and new bills may be passed to prevent outsourcing in certain areas. Although political situations cannot be controlled, it is best to stay current with current events and understand the laws of areas you are doing business with.

Staying updated will allow you to be adaptable to the current situation without breaking any laws.

7. Shoestring budgets

Limited funds and resources can affect any business operation, and BPO is no exception. Sometimes clients expect the best results, but the outsourcing provider doesn’t have the budget to produce them.

Since outsourcing is a way to save money, allocating more funds may be challenging. One way to gain more funds is by negotiating with the client about pricing plans.

Furthermore, it helps you stay updated on your competitors and how they price their services.

8. Health concerns

Employees of outsourcing companies may work long hours a day, which could lead to health concerns such as:

• Fatigue
• Stress
• Lack of sleep
• Burnout

Not only do these concerns result in a decrease in productivity, but they also put the employee’s physical and mental well-being at risk.

BPO companies must prioritize employee wellness by being mindful of scheduling and time zones. Effective communication should also be maintained without disturbing employees outside of work hours.

9. Lack of talent

Given how competitive the BPO industry is, it is also expected that new, talented employees will be hard to find.

The solution is to implement creative recruitment strategies that will entice potential employees to join the company.

Increasing the diversity of candidates and understanding their strengths are keys to creating a positive and efficient work environment.

10. Digital/technical difficulties

The BPO industry runs 24/7 to cater to clients and customers all over the world. However, they are also vulnerable to disruptions and connection problems.

Things like poor internet connection and power blackouts can cause delays in operations, slowing down progress and wasting precious time.

It is best to keep up with emerging technological trends by adapting to new technologies to make business operations more efficient.

11. Managing client expectations

It can be hard to achieve 100% client satisfaction when their expectations are very high or unrealistic. It becomes a lot more work on the part of the employees, as well as the company managing the client’s expectations.

One way to solve this is with a proactive approach. Find a balance between the company’s capabilities and the client’s expectations.

If the client continues to set unrealistic standards, it is best to negotiate with them and raise these concerns to find a middle ground.

12. Different company culture

In line with communication issues, employees from various places may be confused or disoriented by the difference in company culture.

The work environment may be completely new to them, inhibiting their performance and affecting their mental state.

It can be a challenge for the employee, and the two companies working together may experience some disparity in how they do things. This could lead to friction and the client choosing to get their services elsewhere.

The solution is to cultivate an environment where all parties involved take the time to learn more about each other’s organizational and regional culture.

Doing so will allow the culture-shocked employee to be more educated and aware of their field of work, and the two companies will learn more about how they can work together.

Effective communication leads to a more productive workplace where all employees and clients can thrive.

How can BPO improve in the future?

The industry will continue to grow, meaning these BPO challenges will never go away, but they can be prevented with the right plans of action.

Outsourcing providers can minimize these problems and operate more smoothly and risk-free by:

• Investing in automation tools 
• Implementing cost-reducing strategies
• Maintaining client-employee satisfaction