What is What is business process outsourcing??
Business Process Outsourcing (BPO) is the delegation of business processes to an external service provider to a nearby or farther location. BPO uses various technology-enabled services to optimize the delivery of services.
Some of the usual outsourced business functions are the following. Payroll
In the case of content providers, these could mean hiring writers, remote editors, or virtual assistants.
BPO speeds up processes and enhances efficiency. Companies that outsource some of their business processes use their time on core services and competencies.
With this shift in focus, companies improve their current processes which may result in improved customer satisfaction. BPO helps companies divert their resources to more critical business strategies.
Often, companies find it impractical to hire a full-time position in-house because of the cost associated with doing so. Outsourcing services can also help them save costs and resources in hiring suitable employees. The definition of BPO outsourcing
In business process outsourcing, a company delegates their services to a service provider. It can be a local firm, nearshore, or offshore company.
Upon reaching an agreement, the service provider will then set up a team for their client. They will shoulder the costs and resources needed, including the office space, workplaces, connection, cloud storage, and IT infrastructure.
The providers are responsible for tracking the staff’s performance and progress. The clients, meanwhile, are responsible for providing the tasks, processes, and KPIs needed for their operation.
In some instances, they are also allowed to incorporate their culture and values to their team and absorb them as a part of their company. What is BPO? How does Business Process Outsourcing work?
Business process outsourcing happens when a business taps a third-party service provider to operate some of its internal processes. Such ‘processes’ include customer service, accounting and finance, or sales.
It is different from hiring an agency to do specific tasks, as the outsourcing provider (BPO) is more concerned with the ongoing production of labour-intensive tasks, instead of the higher-level strategy and guidance.
Now, BPO has broadened and is more akin to staff augmentation, or staff leasing. What are the benefits of business process outsourcing?
There are many benefits to outsourcing, as well as some downsides and risks. Outsourcing powerhouses like the Philippines and India produce high-quality talents at a lower rate due to their low operational costs and full government support.
Since outsourcing companies hire and produce experts in the field, clients can assure better results in their operations – whether in customer service, accounting, or marketing. Their staffs are trained to ensure that their clients achieve the outcome they expect.
Companies are able to scale their staff depending on the demand and availability of their tasks. This also helps them improve their operations by letting their service providers contribute in streamlining their processes.
Outsourcing poses more growth opportunities for businesses of all shapes and sizes. While there is still drawbacks to this practice, it is safe to say that its advantages outweigh its risks.
To explain it further, below we have outlined the top benefits of outsourcing business processes: Cost savings
Companies can enjoy savings of up to 70% by leveraging the salaries and costs in offshore countries.
In the Philippines, for instance, companies can hire offshore staff with a US$500/month salary for starting positions. A team of 10 employees would only cost them as much as a single worker in the US with an equal position. Global market
Small and medium-sized businesses find it most difficult to hire local employees that suit their roles.
The widened skill gap in developed countries paired with economic crises affects their capacity to expand their teams as needed.
Businesses get to access a bigger pool of talent that can fit their requirements. They can have better options in hiring employees since they are not limited to what is available in their home countries. Global presence
At the same time, outsourcing opens clients to global trade opportunities. They can establish their global presence and expand more easily to other locations since they already have operations in the area. Flexible workforce
Outsourcing is a great way to establish a remote workforce, especially for companies looking to implement this setup for the first time.
BPO reduces internal local compliance obligations including providing additional office spaces to employees. Instead, organizations can hold their business operations on a remote setup, most usually having their teams in an office provided by the BPO firm. Leverage skill
Companies cannot always do everything on their own. Burnout within entrepreneurs and teams are more common than everyone thinks, especially with everyone filling up the tasks beyond their skill sets.
A BPO company enables them to leverage the skills of other specialist companies on more complex tasks such as accounting and IT. Focus
Lastly, BPO enables organizations to focus on their core business functions. This is since most of their non-core business operations are done with the help of a reliable service provider. Business process outsourcing examples
The BPO sector is a vast industry, generating over $200bn annually, and employing millions of people worldwide.
As stated in the Market Analysis Report, the global business process outsourcing market reached over USD 245.9 billion in 2021. Thus, it is foreseen to acquire a compound annual growth rate (CAGR) of 9.1% this year, 2022 to 2030.
The proliferation of the global BPO sector is utterly driven by several key factors that organizations take full advantage of: Improved efficiency and agility
Focus on core competencies
Decreased operational costs
Adapt to the ever changing business dynamics
In general, when we speak of outsourcing, it always entails contracting out parts of business processes to an external provider either domestically or offshore.
BPO can be seen in different forms and contexts, from hiring single staff to getting an offshore team.
Here we have listed some of the examples of business process outsourcing: Big enterprise
Corporate outsourcing has been around since the industry started. The new breed of large companies are still taking advantage of its benefits and use it to expand their offerings further.
Some of the known enterprises that outsource their services today include the following. Google. Google has been ramping up its outsourcing efforts since 2016 by delegating development and customer support.
Facebook. Meta, particularly Facebook, outsources content moderation to the Philippines as a way to filter toxic content and keep the platform safe for its users.
Wells Fargo. Wells Fargo has been outsourcing their operations to the Philippines since 2011. It has recently pulled out its functions in the country, though the company retained its BPO center in Manila. Medium-size businesses
A medium business with 50-500 staff might outsource the labour-intensive accounting and finance functions to a team in the Philippines. Small business and entrepreneur
The recent Clutch survey stated that around 90% of small businesses plan to outsource their services in 2022 due to the efficiency and flexibility that companies get.
It is common for small business owners to have a Virtual Assistant (VA) working for them full time and remotely from the Philippines.
Aside from this, organizations can delegate other services such as development, IT, and digital marketing. What are the different types of BPO?
Outsourcing can be executed in different forms, depending on the outsourcer’s needs. Truth is, not everyone are fully aware, and has an in-depth grasp of the BPO sector.
For most people, BPO can simply mean farming out business processes to third parties located in another country, but this is just one type of BPO.
As for businesses, it is always vital to be familiar with the various classifications and functions of BPOs. This way, they are able to opt for a business process outsourcing provider that is best suited for their type of requirements and industry.
More importantly, outsourcing is not a one size fits all strategic approach, this is why it is not enough just know what outsourcing is and how it works.
There are several types of BPOs that businesses can choose from. The type of business process outsourcing can be characterised by their specialisation, location, and size. Generalist or specialist BPOs
Business process outsourcing is in the human resources and professional services sector.
However, their services extend across all industries. The majority of BPOs are generalists, in that they offer a full range of professional services.
Meanwhile, some specialise in certain verticals such as the following. Legal process outsourcing
Legal process outsourcing deals more with delegating legal processes and compliances to legal firms in another area.
Knowledge process outsourcing
Meanwhile, knowledge process outsourcing enables companies to outsource knowledge-related work including research and development, innovation, and creatives. Location
Business process outsourcing typically operates from developing nations such as the Philippines, India, and Colombia. They typically have cheaper cost-of-living and bigger populations. Different locations offer different advantages. Size of BPO
The bigger BPOs employ more than 250,000 people. They are huge, global operations. Medium-sized BPOs range from 500-5,000 staff and offer a full range of services. The smaller BPOs might have 1-500 people. Offshore
Offshore outsourcing refers to the process of delegating a part of operations or a department to an offshore country.
To maximize profitability and efficiency, companies choose to outsource to a different region or timezone. India, the Philippines, and South Africa are some of the popular countries known for offshore outsourcing services. Onshore
Onshore outsourcing or onshoring, meanwhile, is preferred by firms looking to delegate their services within their country.
Onshoring does not offer much savings as that of offshoring or nearshoring. However, clients prefer this as a way to maintain their branding and satisfy their local markets. Nearshore
Lastly, nearshore outsourcing is preferred by companies that do not want the hassles of time zone and cultural differences in offshoring but still want to get the best out of their delegated services.
Through nearshoring, businesses can collaborate with their teams located in a nearby country. This gives them the opportunity to maintain their local compliance and save on costs since most nearshore locations are cheaper than their onshore counterparts. Functions of business process outsourcing
Collectively, business process outsourcing provides any kind of staffing solution. Common functions of BPO include: Finance and accounting
Outsourced finance and accounting services help businesses manage their books, monitor cash flow, and keep up with corporate income tax compliances without fuss. Healthcare
Healthcare outsourcing, meanwhile, organizes various back- and front-end functions done for the healthcare and insurance industries. Creative and content
Creative services outsourcing covers everything from post-production of Hollywood movies to newspaper and website content. Tech, IT and development
IT outsourcing involves delegating network management, web and app development, and cybersecurity protection to IT firms in different countries. Sales & customer support
Some BPO providers specialize in sales and customer support for pre- and post-sales transactions. This helps companies meet the expectations and demands of their customers, keeping them satisfied even after their purchase. Marketing
BPOs and marketing firms can help in ongoing marketing, communication and branding activities for their clients. This helps them attract more suitable leads in a cost-efficient way. Talent and HR
Businesses can delegate HR, recruitment and compliance to professional employer organizations to maximize recruitment and workforce management. Administration
Generalist BPOs help organizations accomplish general business administration and operational activities. This includes data entry, appointment setting, and other related functions. Supply chain management
Lastly, e-commerce stores benefit from outsourcing supply chain management to manage warehouse and delivery processes. The future of BPO outsourcing
We have gathered five expert opinions from renowned global business leaders. They shared how they perceive the future of outsourcing will be, including the trends that will prevail in the coming years. Meg Marrs, Safer Senior Care
Meg Marrs of Safer Senior Care strongly believes that entrepreneurs and business leaders should outsource their essential tasks. “Outsourcing certain roles has freed up my time to focus more on big picture strategy, rather than being completely meshed in the day-to-day tasks.”
One thing is certain, outsourcing to support businesses growth is something that will never go out of trend. Sean Nguyen, Internet Advisor
As for Sean Nguyen, Director of the Internet Advisor, outsourcing to streamline processes is another essential trend that businesses will continue to apply.
He quotes, “Outsourcing can be really helpful, even at the most incipient levels, because it allows you to streamline operations. If it’s not essential to have it taken care of in-house, there is no reason to do so.” Elandas Miller, Kicking It Sports
Elandas Miller of Kicking It Sports, has been outsourcing back office and creatives since 2017. “I like to think of outsourcing as a tool to help me get to my goals faster and more efficient without burning myself out.”
Outsourcing to support both organizations' short and long term goals is another trend that companies will practice in the foreseeable future. Tom Baker, Tom’s Projects
The founder of Tom’s Projects, Tom Baker, offshores his entire product and development. “Outsourcing means that we can scale the team up and down when need be.” Scaling workforce through outsourcing is yet again, among the trends that will remain prevalent. Bobby Reid, Capitol Tech Solutions
For Bobby Reid, founder of Capitol Tech Solutions “Outsourcing has helped our business by being able to provide expertise for a service quickly. While these contracts are outsourced, they are incorporated into our company culture when possible, since they are working full time with our firm.”
Lastly, outsourcing to fill-in talent gaps and expertise is one of the key trends that more and more organizations will utilize in the coming years.
The future of work is digital, says Outsource Accelerator Founder and CEO Derek Gallimore.
The world has moved on from manufacturing and creating products to providing services. And as we enter the post-pandemic world, he says we are “moving towards a single global economy.”
The concept of work dramatically changed with COVID, and things have changed for good. These changes made us realize that technology is available for remote and digital work interfaces.
Once showed an unsteady growth, the global outsourcing market spiked to US$245.9 billion in 2021. The sudden surge of demand brought by the pandemic along with the worsened talent shortage has led companies to increase their outsourcing efforts.
In a podcast episode, Derek explained, “There are eight billion people on the planet, and they are now all increasingly connected digitally.
There are [also] four billion people who are highly-qualified professionals sitting around the world, and they’re not just virtual assistants and basic roles. You can find [people with] PhDs, architects, accountants, or whatever you need for your business.”
To conclude, Derek believes that the global economy and a globally-sourced workforce is the future, and it is not going away.
Leaders all over the world also know that outsourcing is here to stay. Former US President Barack Obama says that jobs that have been outsourced cannot be brought back to the country.
As a result, it is better to retrain and re-skill the workers who have lost their jobs on account of outsourcing.
Obama further suggests that community colleges could provide the necessary skills for a person to be gainfully re-employed in the workforce. He adds that this is a necessity that Americans look forward to in the future.
Looking back doesn’t always make people feel good, so it is essential that they retrain for the ‘jobs of the future.’ How to choose a Business Process Outsourcing vendor
Over the years, outsourcing has been the go-to strategic practice for businesses looking to scale their operations effectively.
But just like any other venture, companies should be wary of the possible drawbacks of outsourcing before selecting a BPO company. Risks of BPO outsourcing
Despite its advantages, business process outsourcing done incorrectly leads to outsourcing risks that affect a company one way or another. Hidden charges
Some BPO vendors do not totally disclose the total fees they charge and their terms. Clients could experience “bill shock” upon seeing the hidden charges they get. Compliance issues
Compliance is crucial, especially in handling financial information and dealing with intellectual property. BPOs that violate compliances could risk their clients’ reputation and branding. Problems with security
Lastly, BPO vendors with loose security compliance could risk getting their client’s data exposed and used for malicious purposes. Choosing the right business process outsourcing vendor
The key to successful outsourcing lies in choosing a suitable business process outsourcing vendor and working with them along the way. Here are some of the considerations to look for in a BPO vendor. Expertise
A BPO vendor’s expertise can be shown primarily through their approach to their clients. Even without getting too technical, they can comfortably discuss the initial solutions to provide according to their client’s requirements. Compliances
Especially when delegating functions involving sensitive information, a BPO vendor should be up-to-date and compliant with regulations relevant to their services. Check for ISO, HIPAA, and PCI certifications as much as possible. Employee satisfaction
A good BPO vendor also places employee satisfaction to their priority. Check on employee reviews online to see how the staff feels about their company. Technology
The tools and equipment a BPO vendor uses largely affect their performance in general. Check to see if they use updated technology at work and how they train their employees on using them. Top BPO companies in the world’s top outsourcing hubs
A wide range of business process outsourcing companies in different parts of the world provide the utmost services to their Western and local clients. Many of them even earned recognition by award-giving bodies due to their performance in both their roles and their level of care for the employees.
Check out the top BPO companies in several outsourcing destinations below. Top BPO companies in the Philippines Top Indian BPO companies Top South African BPO companies Business Process Outsourcing (BPO) services
With the rise of new offshore outsourcing locations, companies can have better options in terms of location and services they can delegate. However, finding a suitable BPO company can be a daunting task to be done on their own.
Good thing advisory services such as Outsource Accelerator is there to help them.
Outsource Accelerator is the most trusted source for independent information & advisory for Business Process Outsourcing (BPO). We have over 5,000 articles, 400+ podcast episodes, and a comprehensive directory with 3,000+ BPOs from different locations.
Outsource Accelerator’s offerings make it easier for clients to learn about, and engage with, business process outsourcing companies worldwide.
Want to learn more about outsourcing? Check out the Inside Outsourcing book as well as the Inside Outsourcing book review today!
What is Customer Satisfaction Rating (CSAT)? What is customer satisfaction (CSAT)?
Customer Satisfaction Score (CSAT) is a popular key performance indicator that tracks customer satisfaction. The process involves a survey question or a set of questions.
The customers answer by indicating their level of satisfaction. The most popular scale is 1 to 10, with 1 being the least satisfied and 10 as the most satisfying level.
The result gives a business the necessary output whether or not to improve customer service right there and then. However, the possible ambiguity might be a disadvantage, especially if a customer is dissatisfied with the service. Why is CSAT important?
CSAT scores allow companies to look into how their customer feels in each interaction with sales agents. CSAT provides business leaders with two important pieces of information — a detailed insight into every touchpoint of the customer journey and the overall customer experience.
Customer satisfaction scores enable businesses to determine the pain points in their service that impacts the customer journey. Addressing all these pain points and correcting them helps identify unhappy customers and turn them into happy customers, which in turn, increases the customer lifetime value over time.
Buyers are also more likely to become repeat customers — and eventually, become loyal clients — if they have experienced an excellent customer experience in a particular business.
Moreover, because CSAT is measured through doing a customer satisfaction survey, as well as gathering feedback and online reviews, sales agents can do a deep dive into their customer base. This means that they now have access and the capacity to understand what their clients need and want from any business. How to calculate CSAT?
Measuring CSAT is pretty straightforward.
All you have to do is add the positive responses together, divide them by the total number of responses collected, then multiply by 100. The outcome leaves you with the overall percentage of customer satisfaction in your business.
For example, if 50 people took part in your customer survey and 30 of them gave positive feedback — your CSAT score would then be 60%.
(30 positive responses / 50 total responses = .60 x 100 = 60%)
This indicates that while the majority of your clients are satisfied with your service, you can still improve it to better serve your customers.
The best time for measuring customer satisfaction is post-sales. These times are especially crucial for repeat and new customers as the experience is still fresh in their minds. What is a good CSAT score?
Now that your customer satisfaction score, the next thing to do is determine if it is good enough to guarantee excellent customer service. Is your numerical score enough to gain new customers and improve the overall customer lifecycle?
While every industry has different standards for CSAT scores, an excellent rate usually falls between 75% to 80%. Reaching this customer satisfaction rate means that three out of every four buyers had a positive experience with your brand.
While most companies would love to see 100% satisfaction in their services, that is rarely the case. Additionally, the pandemic has certainly affected customer happiness when purchasing a product or service.
Each buyer has their own opinions and standards. Having customer conversations, hearing their responses, and gauging customer happiness ton a product or service can help companies create new strategies that could improve customer satisfaction. CSAT in outsourcing
Customer satisfaction score might be the simplest metric but it’s a powerful tool for all businesses. It encompasses the whole customer journey and helps businesses determine the things that they should improve on to gain customer loyalty.
Measuring customer satisfaction is quick and easy. You add up all the ratings and divide the total score by the number of respondents. Most likely, you’ll get a percentage.
Get your customer satisfaction score a notch higher by outsourcing your customer service team. Check out Outsource Accelerator’s extensive list of outsourcing companies in the Philippines. Strengthening customer loyalty with CSAT
Customer loyalty refers to buyers who always go back to your brand to do repeat business. It is usually brought on by customer satisfaction, positive customer experiences, and the overall value of the goods or services a customer receives from a business.
A company's CSAT score evaluates the services of different brands and determines if your company is able to retain customers instead of losing them to competitors. It also brings customer feedback so that businesses can strengthen their services.
It could be hard for business owners or sales representatives to identify unhappy customers from satisfied customers. CSAT surveys assist in detecting customer satisfaction at the earliest stage of the customer lifecycle.
They allow companies to amend poor customer service and improve it before experiencing the worst-case scenario — customer churn.
Remember, customer expectations for a possible repeat business rather than lose them to competing brands. Trust is a critical part of any business relationship, but finding the right strategies to improve it — along with your customer satisfaction — can be challenging.
There is more than one side to the customer satisfaction equation. The key to improving customer satisfaction is a healthy balance between understanding and improving performance internally while doing the same with customers externally. Tips to improve your CSAT scores
There are a couple of tricks that you can use to improve your CSAT score and ensure excellent customer interaction all the time. Here are some of them: Request customer feedback
The easiest way to gauge your market's reaction to your products or services is to ask them to rate their customer experience. This can be done by handing out customer satisfaction surveys to post-calls or asking them for an online review.
Gathering customer feedback will help you determine the issues in your service and address it quickly so that you wouldn't lose the trust of your clients. Meet customer expectations
Customers usually expect to gain whatever good things you have said about your business. So, to keep them satisfied, it is important for your whole team to work hard in meeting those expectations.
For example, if you say that your customer support call center is open 24 hours, then you have to put some of your staff on standby at all times for any inbound calls. If you advertise that there is a promo for a specific product, then you have to uphold for every buyer.
Additionally, it is important to remain transparent with your consumers. From the time that they are still prospective buyers, you have to make sure that they already know what to expect from your brand and the policies that they will be agreeing with as paying customers. Provide proactive customer service
If you want to boost customer satisfaction, you have to make sure first that you have a dedicated contact center for your clients. This contact must be personal, timely, and always pertinent to the user.
Reduce inbound calls in call centers as they increase agent effectiveness. By offering customer service proactively you can show the customer that good support does not only benefit the business. CSAT vs NPS vs CES
CSAT is not the only key performance indicator that measures customer satisfaction. Businesses also look into their net promoter score (NPS) and customer effort score (CES) to capture customer feedback and measure customer loyalty.
The net promoter score determines the likelihood of customers recommending your business to other consumers. The higher your NPS score is, the bigger chance there is for brand recognition. NPS scores are usually measured using a 1-10 rating system.
CES, meanwhile, measures customer sentiment on how well they have used your products or services. The CES surveys aim to determine the ease or difficulty of customers deciding on purchasing your products.