Business Process Outsourcing: definition
Business Process Outsourcing means subcontracting business functions and processes to external providers and managers. When companies outsource business processes, they delegate tasks and duties to specialized companies. In the past, these processes were usually handled by internal offices and employees.
As market demands grew, companies began looking for ways to increase agility and flexibility in order to be competitive and maintain a leading position in the market. One of these strategies was to delegate secondary activities so they could focus on their core competencies. Even though these tasks were not the main business activity, they were still fundamental to the companies’ operations.
Business Process Outsourcing began as a way for companies to reduce costs, increase productivity and gain access to a specialized workforce and advanced technology without having to make an investment. Today, Business Process Outsourcing has evolved into a strategically critical business approach aimed at improving a company’s business model.
Discover the benefits of BPO by reading here.
Types of Business Process Outsourcing
Business Process Outsourcing can be classified according to two main criteria: type of service and location. If we analyze Business Process Outsourcing by type of service, we can identify two main types: Back Office outsourcing and Front Office outsourcing. If we were to classify BPO by location, there would be three main types of outsourcing: offshoring, nearshoring and onshoring.
It is important to understand the main types of BPO in order to be able to decide what is best for your company’s needs.
Back Office vs Front Office Outsourcing
The difference between these two types of outsourcing depends on whether the outsourced tasks are connected with customer relationships or with administrative activities.
Front Office outsourcing — When the outsourced services are directly connected with the customer and with revenue generation. Companies choose to outsource customer-related processes because it helps focus attention on the customer without compromising the quality of the services and products provided. Maintaining good customer relationships and a high Customer Experience not only makes companies stand out from the competition but also helps grow revenue and the business.
Some Front Office services that can be outsourced include customer service, telemarketing, marketing, sales, help desk, technical support, etc.
Back Office outsourcing — Includes all the administrative functions and tasks that help manage and support a company “behind the scenes”. Normally Back Office services are non-essential functions that are nevertheless fundamental for the company to operate successfully. Delegating such tasks is an important strategy for companies that want to focus on their most important tasks. Some of the main Back Office services that can be outsourced are data entry, document archiving, payroll management, accounting, invoice management, human resources activities, IT support, etc.
Outsourcing strategy and BPO partner
The location of the BPO Partner plays an important role in a company’s outsourcing strategy. Geographical location is an important factor, taking into account time zones, cultural differences, costs, language skills, etc. So offshoring, nearshoring and onshoring each have their own advantages and disadvantages, which every company should consider before choosing their BPO Partner.
Offshore Outsourcing
Offshoring means subcontracting services to a company located far from the company’s headquarters. Normally Offshoring means outsourcing to a company located on a different continent. The main advantage of Offshoring lies in having low operating costs. Another advantage lies in the service coverage hours that would otherwise be very difficult to manage (night shifts and after-hours). However, outsourcing to a distant geographical location can become problematic because communication problems may arise (different time zones, hard to reach, hard to monitor, travel inconveniences, language and cultural barriers, etc.). Having low costs at the expense of service quality is far from a winning business strategy. In the long term, in fact, choosing low costs at the expense of quality will prove to be an expensive solution.
Nearshoring Outsourcing
Outsourcing to nearshore locations means delegating services to a company located near your own, usually within the same continent or region. Nearshoring can still provide the cost benefits of offshoring without the communication problem. Although slightly more expensive than offshoring, nearshoring has several other advantages, such as being in a similar time zone to your partner, having more control over your projects, having a similar corporate culture, having access to a larger workforce pool, etc. Outsourcing to a nearshore location allows companies to reduce the risks associated with offshoring.
Onshoring Outsourcing
Onshoring — outsourcing to an onshore location means outsourcing to a local company, based in your own country. The main advantage of outsourcing to a local company is the proximity of the outsourcing partner, so that better control of operations is possible. Onshoring prices are usually higher than both nearshoring and offshoring. Having a higher price does not necessarily mean receiving a higher-quality service, however. Outsourcing within your own country will restrict access to global talent, make scalability and flexibility more difficult and limit the area of expertise available.
Which business processes can be outsourced?
As already mentioned, the range of business processes that can be outsourced is very wide. Companies can choose to outsource individual non-core processes or even entire departments. Some of the most popular services that companies choose to outsource are Customer Care, Data Entry, Back Office, document management, sales and marketing, help desk, etc.
Recent years have also shown an increase in HR, finance and outsourcing, with companies choosing to have a specialized partner to manage the processes related to these departments, such as accounting, recruitment, payroll, technical support, issue logging, etc.
To have a clear outsourcing strategy, a company can start by analyzing its internal business objectives, the company itself, the costs of operations and the current strategies in place.
By carrying out As-is and To-Be analysis, a company can identify areas for improvement related to services, possible actions to reduce costs and opportunities to generate more revenue that can be achieved through the strategic outsourcing of certain services or offices to a trusted BPO partner.
How to choose the best BPO partner?
There are several aspects to keep in mind when choosing your BPO partner. Location is one of the most important factors that helps in the decision-making process. Outsourcing to a nearshore BPO, like WeAreFiber, can help maintain a balance between the cost and quality of the services.
While price is important, quality should be the main concern for companies that want to outsource. A good BPO partner should have the right procedures to ensure high-quality standards. At WeAreFiber, we have established a two-level quality assurance department to ensure that quality requirements are met.
In addition, data security and protection are also very important. A reliable BPO partner must comply with GDPR regulations and have a clear data protection policy. The ideal BPO partner should also offer flexibility, functionality and transparency.
We Are Fiber
We Are Fiber, founded in 2006, is a business process outsourcing provider operating mainly in the European market. We Are Fiber is focused on providing Back Office and Front Office solutions such as Customer Service and Data Entry to blue-chip companies as well as startups and SMEs.
Our experts can help you define business objectives and an outsourcing strategy by analyzing your business model and your existing operating process. We have a proven track record of success, gained by helping companies in various sectors, such as Travel and Leisure, Food and Beverage, Transport and Logistics, Healthcare, etc.
Click here if you would like to request a Call-back from our team, dedicated to understanding and analyzing your outsourcing needs.
Phone (IT) +39 02 42 10 11 22
Phone (UK) +44 20 38 70 44 08
