For an expanding business, increasing operations means shouldering additional expenses. More marketing duties, for instance, means more personnel and equipment to invest in.
This is one of the reasons business process outsourcing was made. Before, outsourcing only catered to the needs of large enterprises such as telecommunication companies and real estate giants. Now, BPOs and manufacturing companies opened their services to small businesses and startups to help them save on business costs.
Not everything may be outsourced to these companies. Core management duties, for instance, are best retained in order to control their growth and improvement.
What does outsourcing mean
Outsourcing is technically contracting a third party company for skilled resources. The business pays the outsourced company for putting up either a team for them while the latter takes care of the tools and equipment needed for the job.
Employees in outsourced services usually don’t have an employer-employee relationship with the business, because it’s the third party’s duty to handle management tasks. However, businesses can still reach out to them to make them feel like they’re an extension of the company.
Business process outsourcing is the most popular trend today. Businesses outsource repetitive and specialized tasks to different companies to save on resources and focus on core management strategies.
Benefits and risks of outsourcing
Outsourcing can have big benefits in businesses. These include:
- Save up to 70% on labor costs. Outsourcing offshore, especially in Asia, can be a lot cheaper than hiring direct employees since they have a low cost of living in their countries.
- Access to a global talent pool. Outsourcing gives businesses access to more experienced talents with different specializations across the world. These talents can also provide high-quality output at a fraction of an average salary in their home countries.
- Eliminate repetitive processes. Outsourcing passes the repetitive tasks to skilled workers so businesses can focus on more important matters.
- Improved efficiency on tasks outsourced. Specialized tasks are handled by workers specialized in different fields such as accounting and finance for a more efficient workflow.
- Opportunity for business to grow. Outsourcing also gives businesses a chance to expand their services to different locations and reach a new market.
However, these may pose risks on businesses, including:
- Confidentiality and security issues. When handling calls and communications from customers, BPO companies are exposed to sensitive information given to them by the customers.
- Lack of complete quality control. At times, businesses risk moderate to poor quality from the outsourced teams to their customers because they don’t have the full control of the BPO operation.
- Hidden charges by the third party. BPO companies may charge more than agreed upon due to charges not mentioned in their websites or proposals.
- Cultural and language barriers. Especially when outsourcing overseas, customers and agents might have a hard time understanding each other because of language and accent barrier. Agents may also experience culture shock with their clients.
Identifying tasks to outsource
Certain things should be considered when identifying what tasks can be outsourced and what cannot. In order to identify this, businesses must first do the following:
- Setting clear expectations. Businesses should determine what are their objectives in outsourcing and their expectations in outsourcing a task.
- Looking at the processes. Reviewing the process is important in determining what to outsource. These are usually small tasks and those that don’t require face-to-face interaction or those repetitive processes.
- Organizing tasks accordingly. Tasks to be outsourced should be organized according to the level of difficulty in doing the tasks and its turnaround time.
What to outsource
Businesses usually outsource tasks that are repetitive and don’t need the employee to be onsite, as well as specialized tasks such as IT, accounting, and tasks that require technical and creative outputs such as graphic design. Outsourcing companies also cater to different sectors with specialized needs.
The top roles that businesses outsource are as follows:
Small tasks such as checking emails, setting appointments, and organizing schedules can be repetitive and time-consuming. Some tasks need to be done by someone who has a specialization in doing things.
A business owner cannot be their own accountant, content specialist, and marketing strategist at the same time. They need someone to do these tasks in order for them to focus on more important things such as closing the deal to the investors.
Virtual assistants can set appointments for them to help them organize their schedules and meet deadlines for the company deals. Having a marketing strategist helps the company to promote its products more effectively and gain more traffic to their site.
Outsourcing these tasks can save time and energy for business owners instead of hiring separate in-house employees. This can also generate savings for the company. No more additional taxes and payroll involved, the outsourcing company will take care of these for them.
Human resources are one of the most important investments in a business. The manpower handles the core strategic operations to keep the company moving. Especially for a growing business, handling human resources can be difficult and tedious.
HR teams should be taking care of employees, handle recruitment, tracking the number of open positions in a company, handling everyone’s 201 files, providing training and seminars, and handle the payroll, but can grow out of hand with the increasing number of employees in a company.
Outsourced teams can handle these tasks to easily manage talent acquisition and handle in-house employees at the same time. This can save the effort of hiring more employees that do repetitive tasks and the resources they will consume. What’s more, these teams are taken care of as well by the outsourcing company so there’s no pressure in handling them.
IT-related businesses also need help in building and maintaining their products and infrastructures to deliver smooth service to their clients. In-house employees mostly shoulder the IT support system of the company. When duties go overboard, it’s most likely that the company won’t deliver its services and will take a long time to innovate and upgrade their systems.
This is the reason most IT-related businesses outsource their services. In this way, the burden of their tasks can be eased and different IT infrastructures that can affect their data and network are taken care of.
Nowadays businesses measure their credibility and traffic by putting up their own website and social media pages. And what’s a better way to generate traffic and gain customers than to create content and keep up with the trend.
In digital marketing, they say content is king. It helps the website gain credibility through Google rankings and search engine optimization. It can also help if businesses know the latest trends in social media and reach out more to their customers there.
Startups, in the beginning, usually create their own content and learn how this can impact their websites, but as their businesses grow, there’s no wonder that they need the help of an expert to do these for them.
Outsourcing these tasks can help them improve these traffic over time with the help of different experts in the field. They can even help put up advertisements and campaign promotions for the website and their products so they can focus on simply monitoring their profit and customer gains.
Businesses also need to pay attention to the innovation they make – software, web, or mobile development. This is crucial especially to the era when customers demand more personalized interaction with the business and customer experience is the rising trend.
Software development doesn’t just end with hiring highly-skilled personnel for the job. Employers also need to provide proper equipment for their tasks, an office space where they can work properly, continuous training and industry updates, and proper salary and benefits for their employees. Since they’re dealing with highly-skilled and highly-trained personnel, their pay might be higher than an average employee in the company.
The process can be tedious and costly, especially for startups. That’s why it’s best to outsource these roles to save time and resources consumed when hiring an in-house team.
Outsourcing companies also cater to different sectors and have teams of experts in the field to do specialized business needs.
Banking and non-banking institutions that offer financial services made it easier for everyone to handle their finances thanks to their innovative technologies. With this, basic banking, investing, and payment processing has made it easier and more affordable due to these innovations.
Businesses in the financial sector usually outsource their technical and customer support services. This also gives them the opportunity to expand their business to different countries and give everyone access to their financial services overseas.
Their remote teams help foreign and domestic clients open accounts, navigate their services, and resolve their concerns so that these institutions can focus on improving their products and gaining more clients in the long run.
One of the most important aspects of a banking institution is data security. Since they cater millions of personal and financial data, they need strong encryption and security for this. Outsourcing IT-related tasks for their cybersecurity also gives them access to high-quality protection and service that their BPO can provide them.
The real estate industry has followed the outsourcing trend due to its growing market, especially with foreign clients. The slow growth of the global economy is one of the cited reasons for this. With the increasing competition and methodologies in the industry, companies need to limit their budget and allocate it on more important matters such as construction and maintenance of properties.
Real estate companies save more on outsourcing administrative, legal, sales, and marketing tasks than hiring in-house employees. This frees them from expensive labor costs and resources used in setting up the team while still receiving high-quality output.
Experienced realtors and virtual assistants handle inquiries on properties and schedule site visits. Property managers handle the property owner’s accounts and ledgers on billings and payments. The customer support team establishes and maintains a connection with their customers by establishing good customer relations.
Outsourcing is also becoming popular with businesses offering healthcare services. Hospitals and health institutions also benefit from outsourcing their services. Most patients experience difficulties in processing their medical bills and applying for their health insurance every time they take a trip to the doctor and undergo medical consultation. This usually results in hospital revenue loss.
Aside from this, hospitals also need to outsource their administrative and other non-medical tasks. Hiring direct employees for these tasks can cost hospitals a lot. From office space, employee onboarding, and training, to the salaries of each personnel. Not to mention they have medical staff to take care of, too.
Outsourcing these tasks can help hospitals and health institutions save resources so they can focus on upgrading their facilities and giving quality health care for their patients.
Legal process outsourcing increases its demand due to the financial difficulties faced by law firms in different countries. Law institutions are trying to find ways to cut costs on resources while attending to their clients’ demands.
It also benefits their clients, especially in corporate agencies, since these LPO companies now handle client cases more efficiently. These companies also help law firms to expand their market and reach out to their international clients.
Last but not least, the telecommunications industry has used outsourcing for its technical and customer support services. In case of new installation and connection difficulties due to equipment, third party installation contractors set schedules to available technicians within the customer’s location.
Sales and marketing teams, meanwhile, take care of sales and marketing campaigns through email, social media, and phone. With these, internet service providers and cable TV companies can provide affordable and high-quality service to their customers.