Myths About Business Process Outsourcing
Business Process Outsourcing is one of the most hotly contested topics in business today. This is because there are many myths surrounding outsourcing and its effects on the economy - some believe that it can help to reduce unemployment; others argue that it will lead to job losses. Others claim that it is an effective way of increasing the productivity of a company, whereas some argue that outsourcing hurts internal operations.
Outsourcing is a business strategy that involves hiring a third party to perform functions outside of the company. Outsourcing can take place both inside and outside the country for services provided by other countries, which may have lower operating costs than in the outsourcing firm, allowing the service provider to provide its services at a cheaper price, resulting in increased profit for both the service provider and the company.
There are several myths about business process outsourcing (BPO) that exist in society today, Here are some BPO myths debunked:
MYTH: BPO Firms Don't Care About the Quality of Service They are Providing.
REALITY: This is certainly not the case, as BPO companies generally only retain customers that provide them with strong word-of-mouth referrals and testimonials. Firms with a high standard for excellence are likely to maintain long-term customer relationships. One reason why this myth exists is that it is difficult for customers to remain objective in their assessments of external providers given that most often there's a lack of knowledge about how an internal process works before engaging an external provider. It can also be challenging for firms to properly assess quality if they are unable to conduct proper due diligence at the outset of a relationship or if they have insufficient experience with contracting external providers. A lack of information or experience can also make it difficult for customers to assess a provider's quality in real-time.
MYTH: Business Process Outsourcing is Too Expensive
FACT: While there are significant costs associated with purchasing business processes, outsourcing reduces fixed IT expenses while increasing the dynamic adaptability and flexibility of the entire organization. It can reduce fixed expenses through lower labor rates and overhead costs in the short run while increasing the overall value of technology investments in the long haul due to increased experiences and productivity levels.
MYTH: Bad Solutions from Low-Cost Providers
REALITY: Customers who engage low-cost providers may typically get lower fees, but they will also get less-experienced workers. It seems inevitable that these functions will suffer as a result of this service delivery model. When it comes to specific BPO services, low-cost providers who use multi-national centers may have more experience in a given back-office function than the typical U.S. Company.
MYTH: The External Provider is Automating My Job
REALITY: Most BPO providers are not implementing technology that directly impacts their customer's workers. Instead, it is being used to streamline processes and make them more efficient (i.e., faster, higher volume with fewer errors). This increased efficiency generally results in cost savings to the customer without impacting the work tasks performed by employees. It should be noted that some "voice" services utilize speech recognition software which may impact a limited number of jobs. This technology has been available for decades but is still not mainstream; thus, it should be evaluated on a case-by-case basis before significant resources are committed to ensuring it provides overall value and minimizes negative unintended consequences.
MYTH: BPO is Something Foreign
REALITY: Most outsourced services are provided by US firms or offshore in English-speaking locations such as India, the Philippines, Mexico, etc. so there is often a cultural familiarity with U.S. customers which can reduce communication strain between customers & providers.
MYTH: Any Competent Outsourcing Firm Will Do
REALITY: Quality varies between providers - choosing one that does not have experience providing similar services reduces your chances for success; likewise an outsourcing provider's ability to scale up or down quickly will determine the timeliness of service you receive. As with any product or service, it is impossible to ensure quality unless you have a strong relationship with the provider.
MYTH: Outsourcing Will Solve All Your Company's Problems
REALITY: Outsourcing is not a "silver bullet" solution to all your company's problems; it must be used properly and in tandem with other improvement strategies. If you are struggling with any aspect of your supply chain management and looking into outsourcing; make sure you have an action plan ready which includes evaluating the abilities to compete with providers before signing on for services. This will ensure that when you engage an outsourcing firm they possess both the capabilities & willingness to do what needs to be done.
MYTH: Outsourcing Is All I Need To Achieve Immediate Success
REALITY: If your company has been struggling with certain operations or processes there is no guarantee that outsourcing will solve all your problems overnight. Business process outsourcing requires careful planning & development, as well as clear expectations on both sides before any real progress can be made. In most cases, it will take a considerable amount of time and money before a company can truly benefit from outsourcing all or part of its operations.
MYTH: The Service Provider Is In It For The Long Haul
REALITY: Outsourcing service providers are in it for the long haul, but they are not charities. They have business goals to meet as well- ones which may not always agree with your own. If an outsourcer tells you that they'll do something for less than what you think is reasonable remember that these kinds of decisions have consequences on their end, too! When selecting a service provider it's important to understand exactly how they make money & how that relates to the cost of the services they provide. Think about how much better off you'd be if you were able to hire a full-time group of employees for a fraction of the cost that it takes your current service provider!
MYTH: Customer Service Is Not Important For An Outsourcer
REALITY: Everyone wants good customer service, including outsourcers. Your contract with the outsourcer is going to dictate quite a bit about how many contacts you have with them over time, but regardless there will likely be cases where something goes wrong and they need to resolve it. When this happens, having experienced & knowledgeable people on board will mean a more effective resolution in less time. This is especially true when dealing with your specific industry - most outsourcing companies won't have that experience so their staff's ability to effectively handle any issues will be much less than your internal team.
MYTH: Outsourcing Companies are not Flexible
FACT: Many companies want a partner who can provide agile and flexible solutions that respond to changing needs. Outsourcing provides clients with the ability to adjust service levels quickly without significant capital outlay or process changes within their internal IT departments, allowing them to easily "plugin" outsourcing services where needed. It gives organizations more choices for IT support and increased responsiveness when scaling up during peak periods or down for maintenance. Some BPOs report having 400% fewer servers than typical on-premise data centers due to these cost savings. This flexibility often results in a faster return on investment (ROI).
Conclusion
Business process outsourcing is not a quick fix, but it can improve your efficiency. The myths that surround the industry are often discouraging to people who want to try this type of service for their business and we hope our blog post has helped clear up some misconceptions you may have had about BPO. If you need help with any aspect of an outsourced solution or would like more information on how they work in general, please contact us so we can help! We're here to make sure your company's goals stay top priority while using services from offshore providers.
