Over the last decade, the word 'outsourcing' has become commonplace, and businesses across the globe find it useful. Business Process Outsourcing (BPO) is a method of delegating business operations to third-party vendors.
Why would an enterprise want to outsource its core operations to other companies? To answer this, we need to understand a bit more about BPO Services.
What's a BPO?
BPO's are primarily of two types - front office and back office. Front-Office BPO's take up the company's processes that deal with external entities, such as customer service and marketing. Back-office BPO's take care of internal business processes, such as payroll, inventory purchasing, and billing.
BPO companies can be local, offshore, or nearshore. You can choose to use Offshore companies in another country with tax benefits and lower labor costs that give your business a high-profit margin. It is usually the most preferred option among enterprises.
Another option is to choose Nearshore companies in neighboring countries with equal benefits. The last option is to use Onshore companies within your country. Here, you would need to check the cost benefits, vis-a-vis, using in-house personnel.
With this system in place, the enterprise can concentrate on the core business aspects while reducing costs. So, let's look at the top 8 reasons to use BPO services -
- Lower Operational/Labor Costs : The primary reason is lowering operational and labor costs. Every company is looking to reduce costs wherever possible. The most common form of cost-cutting is reducing the number of personnel. The cost of staffing and employee benefits is a burden on any organization. For operations like customer service and marketing, it becomes beneficial to outsource. It has a direct result on the revenue and leads to savings.
- Focus on growth : The benefit of outsourcing internal or external processes is that it frees up time for management to focus on growth prospects. Lead managers can direct their thoughts and time toward building up products and services instead of dealing with mundane administrative activities.
- Access to the latest technologies : BPO's constantly aim to improve services for their customers by offering the latest technologies. It helps businesses stay on top and achieve better results. Companies cannot spend on the most recent updates or technologies when it's needed temporarily. BPO's on the other hand, can utilize the same technology for many of their clients, thereby being cost-effective for them.
- Free up resources : One way to innovate and expand is to focus on newer product ranges or technologies. Having core personnel and resources available for this growth is crucial for every business. With outsourcing, these personnel and resources can be free to innovate.
- Cut down training costs : Outsourced employees are experienced and ready to start from day one. No training or probation period is needed. It thus makes perfect business sense for companies to outsource processes that will reduce training costs.
- Reduce financial risks : It may be sensible to outsource highly-skilled processes to BPO's to reduce any financial risk involved. When companies are unsure of their staff's experience in handling certain operations, it is better to outsource rather than train.
- Tax benefits : For most businesses, tax benefits play a crucial role in the outsourcing decision. Using offshore BPO companies helps reduce taxes to a great extent.
- Global expansion : For companies expanding to newer territories, opening overseas branches, or operating overseas, choosing an offshore BPO company from that location is beneficial. The experience of the BPO company in its country makes it a better choice.
Outsourcing business operations is the right step to go for most companies. Start-ups are the ones who benefit the most. With limited experience within their personnel, outsourcing gives them the head-start to success. Companies that are in the process of expanding also benefit from outsourcing certain operations.
As with any business decision, there can be cons involved. Outsourcing to companies comes with its risks. Data breaches, delays in completion, communication errors, or gaps are some problems that companies may face. Though these risks may seem dangerous, most experienced BPO companies handle them easily.
Talk to us
AppsComp is one of the leading BPO services companies with years of experience. Our global clients have successfully outsourced their core business processes to us, leading to an economic boost.
AppsComp is competent in handling a large team for various services. Companies have relied on us for their business needs and found us reliable. So, let us manage your business and bring you success in return.