For far too many American business leaders, the term “outsourcing” conjures up images of bargain-basement back office factories churning out mediocre results. David Highbloom, an entrepreneur and expert in corporate strategy, marketing, and operations, explains that the truth is much more nuanced: when undertaken correctly, outsourcing can in fact be a source not only of cost savings but also of substantial increases in operational quality and adaptability.
High quality business process outsourcing (“BPO”) providers bring much more to the table than just cheap, generic services. While customer service, back office operations, and IT management are not core activities for most companies, these services are very much BPO operators’ bread and butter.
Specialization Equals Quality
Specialization creates tremendous benefits in quality. Focused providers can customize recruiting and training processes to very specific niche functions as a result of their scale, boosting employee retention, morale, and service quality.
Specialist firms have an easier time attracting high quality talent, who prefer to be part of their employer’s core competency rather than an afterthought. Centralized providers can also afford to invest in the highest quality tools relevant to their activities, from customized CRM software deployments to high quality global telephony infrastructure.
Finally, specialist firms can afford to develop cutting edge technology that pushes the envelope of possibility within the services those firms offer. This is particularly relevant today, as many service niches must navigate a transition from entirely human-driven processes to a future that will likely involve much more basic work being done by AI software.
Today’s chatbots are an early example of this trend, but are likely to look quite archaic in comparison to the automated services that will appear over the coming decade. Very few non-specialist companies can afford to devote resources to this kind of cutting edge technology in order to enhance the quality of functions that are far from the company’s core – a fact that will give BPO providers an ever greater lead in service quality as time moves forward.
Adaptability Wins Opportunities
Second among specialized BPO providers’ core advantages is adaptability. Delivering true 24×7 service availability with 99.9% uptime, low latency, and a consistent level of service quality is not a trivial undertaking.
Dedicated BPO providers can enable even small clients to offer this level of service to their internal and external customers. Similarly, good BPO providers make it surprisingly easy to provide a high quality of service across every available channel – true omnichannel service. As the suite of critical service channels grows ever larger (phone, email, SMS, live chat, an ever-expanding stable of social media platforms…), the value of this flexibility grows ever greater.
BPO providers also have an ability to scale with speed that client companies simply can’t match. Whether that means rapidly expanding a service organization’s headcount ten-fold in a matter of weeks to adapt to peak seasonal demand or ramping a team down just as fast, dedicated service providers are in a position to onboard or reallocate a far higher number of employees in a given timeframe than individual clients possibly could on their own.
While cost is too often overemphasized in discussions about outsourcing, it is of course a core aspect of BPO providers’ value. BPO firms’ relative cost advantage stems from a number of sources. Most obvious among these is labor cost arbitrage, as service providers have spent nearly two decades building up service centers in lower-cost markets in Asia, Latin America, and elsewhere.
While important, the value of wage arbitrage should not be overstated; BPO providers have much more to offer on the cost front than just cheap headcount.
Economies of Scale
Chief among BPO firms’ cost advantages are economies of scale. It simply isn’t feasible for an average company – even a very large one – to expect to deliver a service as cost-effectively as an organization that is entirely focused on a relatively narrow set of front- or back-office services. Everything from operational software to business services to physical technology becomes less expensive on a per-service-unit basis as the service volume over which that cost can be spread expands.
Using an outsourced provider also removes load from the client company’s infrastructure, from phone systems to servers.
Finally, BPO service providers are able to drive costs down over time through relentless process optimization that is enhanced by those providers’ scale, breadth of service offerings, and tight focus on their core competencies.
Takeaway
The case for shifting service demand to a specialized BPO provider has never been stronger. While cost should of course part of that conversation, these providers have much more to be offer than just cheap services. Any company considering outsourcing some part of their front or back office services should strongly consider the case for improved service quality and adaptability that the decision to outsource could deliver.
