ADVANTAGES AND DISADVANTAGES OF BPO FOR YOUR BUSINESS

By Gabriel Gutierrez

Making use of Business Process Outsourcing (BPO) is not a fad. It is a worldwide trend that has come to facilitate the processes and objectives of companies, generating significant monetary and time savings.

Although the outsourcing format has many advantages, it can also bring disadvantages if the leadership makes wrong decisions.

In this blog post, we will tell you when it is necessary to apply the BPO, gain advantages for your organization, and which are the risks of abusing this working format.

THE BPO BOOM

Today, organizations of all shapes and sizes are turning to BPO or Business Process Outsourcing. Its growing demand is mainly due to the never-ending introduction of new services in the market and the fact that organizations are constantly looking for ways to stay ahead of the competition.

However, after deciding on BPO, companies must establish limits when outsourcing a specialized service.

For this reason, it is essential to consider the following:

  • The specialized service provider will not be able to perform the main activity of the client company.
  • The subcontractor should be left in charge of recruiting, selecting, and hiring the personnel that will perform the specialized service.
  • The external company must meet the requirements of the organization that hires it, delimiting the services under a written agreement.
  • The relationship between the subcontractor and the company will be client-client.

The delimitation of functions is necessary for any company that has already decided to outsource.

ADVANTAGES OF BPO

Companies that decide to use Business Process Outsourcing (BPO) are confident that they can obtain at least two immediate benefits: cost and time savings and higher productivity.

Thus, over time, at least seven advantages of Business Process Outsourcing (BPO) have been identified:

  • Better productivity. It allows the company to concentrate on its core operations. Managers or team leaders leave aside the details and setbacks, focusing more on strategy formulation. Delegating tasks inevitably leads to greater productivity.
  • Optimal use of resources. BPO allows for better resource management, an asset that every company must value. Outsourcing helps to reallocate resources and increase efficiency and productivity. The availability of qualified personnel and the adoption of state-of-the-art technologies necessarily lead to the optimal use of resources.
  • Cost reduction. Cost savings are crucial for any organization. By adopting BPO, cost reduction is achieved by improving processes and using technologies that are not under management control. Outsourcing helps companies provide better service at lower rates, positioning themselves to gain a competitive advantage.
  • Improving human resources. Today’s companies need efficient and productive Human Resources areas that add value. Thanks to outsourcing, companies can save on human resources, depending on their priorities, and at the same time, access qualified and specialized personnel at a lower cost.
  • Freedom of supplier. As it is precisely an external specialist service, the company has the freedom to change providers without affecting the processes or the management in charge.
  • Attention to changing customer needs. Many specialized services offer products with flexible services to meet the changing needs of customers, which leads to expanding the company’s offer and even the possibility of new partnerships.
  • Sophisticated technology at low cost. Investing in new technology is costly and often risky, and as technology develops rapidly, it isn’t easy to keep pace with cutting-edge innovations and solutions. A specialized service with resources, expertise, and technology represents a real advantage for the company.

DISADVANTAGES

As in any business, there are also disadvantages to using the BPO model. Leaving it in the hands of third parties requires arduous and meticulous work beforehand to select the best provider.

A wrong choice of specialized service may represent not only a loss of resources but also a loss of brand reputation.

There are at least five disadvantages of the BPO model:

  • Security issues. When using outsourcing, there is a high probability that the company’s confidentiality and privacy will be put at risk since there will be a need to share and process sensitive data. Some processes may be left in external hands, increasing the risk of leaks and theft.
  • Communication problems. Language barriers are a real problem if the company chooses a specialized service outside the country. This situation can delay processes and reduce feedback in different areas.
  • Underestimating service costs. Companies could underestimate the use of outsourcing in their budgets. There is a risk of additional expenditures for unforeseen events such as devaluations or software upgrades.
  • Risk of replicating the business. The outsourcing company may see in its client an opportunity to create a similar business by copying its processes or products.
  • Excess of dependency. Using the BPO model could make the company highly dependent on third parties, particularly in vital procedures. Even a little mistake can directly and seriously impact the company.

Depending on the company’s line of business, other problems may arise with the specialized service.

However, the main recommendation is to follow up and strictly monitor the service to avoid major problems.

TYPES OF SERVICE

When deciding to contract a specialized service, your company should always consider that it will provide knowledge about the tasks outsourced and cost and time savings.

Thus, for example, if the company uses a KPO specialized in jurisprudence, the firm hired should include not only counseling but also drafting legal documents and legal advice.

The premise of contracting a specialized service under the BPO scheme will always be a win-win.

The changing world requires companies to keep pace with customer needs. Delegating a specialized service to an external organization will ensure that it is always up to date while saving costs.

A specialized service, such as those offered by Kreativa, can save costs and time to your organization while providing added value to the contracting organization with permanent contributions that strengthen your brand and maintain your competitiveness.

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