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The global market for Business Process Outsourcing (BPO) is expected to increase at a CAGR of 5.2% to reach $215.9B USD by 2026 . Gartner predicts that 60% of finance and accounting outsourcing contacts will not be renewed by 2025, illustrating opportunity for BPO vendors .
BPO entails delegating responsibility for a set of business operations to a third-party provider in exchange for a fixed fee. BPO allows firms to rationalize costs and remediate difficulties, such as a shortage of skilled staff. Although bookkeeping, customer support, HR management, tax filing, and contact center services are among the more common forms, BPO involves a wide array of business functions and services.
Smaller transactions, hybrid outsourcing, increased governance needs, and lower-cost consultant models have all become more common in the BPO market. Various advantages of BPO include cost savings, enhanced customer service, better focus on core operations, competitive capacities, and speed to market. These services have enticed organizations to outsource. BPO techniques have been altered by an increased focus on Cybersecurity, a wider array of advanced workforce skills, and an emphasis on centralizing global processing, which has resulted in increased operational effectiveness and productivity.
While demand for BPO services has remained strong in recent years, it has shifted away from the conventional aims to achieve low-cost process outsourcing. Many industry clients are increasingly demanding that BPO service providers exhibit some form of innovation to transform their corporate processes. This has led to service providers more actively striving to improve business outcomes, and re-aligning and repurposing the original "lift-and-shift" outsourcing mission (eg. increased cash flow, stakeholder experience, compliance, etc.) to a drive for more value-centric activities and objectives. Companies are increasingly moving to abandon the conventional method of outsourcing processes in favor of utilizing cloud platforms to take advantage of the technology's scalability, agility, reliability, and ability to extract data-driven conclusions.
Considering the BPO industry's continued growth, services have continually evolved to rise to the needs and demands of today’s enterprises. BPO providers now offer both “one-size-fits-all”, and tailored services, to tend to every function imaginable, including market research, third-party verification, debt collection, account management and so on.
The sector has steadily adapted to changing industry demands and expectations. Technological advancement is a major factor affecting BPOs. Demand for extensive experience in focus areas such as robotic process automation (RPA), big data analytics, and artificial intelligence have increased exponentially over the years as organizations look to become more lean and operationally efficient.
Up until the mid-2010s, multi-national corporations were typically the only organizations that outsourced operational functions to external parties. With today’s proliferation of start-ups and small businesses, a need for managed services to thrive in today’s competitive business climate has become paramount. Therefore, sourcing a BPO provider to assist is much easier today as they now cater to more bespoke and tailored workflows. To effectively gauge their suitability for specific client business initiatives and requirements, BPO service providers have been compelled to enhance their operational accountability and offer more transparency in their pricing, policies, and contracts.
In today’s outsourcing environment, BPO service providers highlight consistency and centralization as core value additions in their offerings to organizations at all stages of growth and maturity. In the assessment of which process and operations may be suitable for outsourcing in the corporate ecosystem, many organizations are acting with similar objectives and within specific constraints, including:
Before outsourcing a core business function within an organization, it is important to establish objectives beforehand. These can involve reducing costs, streamlining organizational units, or a variety of other reasons. Whatever these reasons may be, if these targets are not set beforehand, the business will face an uphill battle.
It is also important to recognize outsourcing business processes is not always the right move for an organization, as there are potential drawbacks that could outweigh the potential benefits. Different geographies can cause challenges when outsourcing, as new time zones and different cultures and dialects need to be brought into the equation. Also, if management values having close oversight over every aspect of their business, shifting mindsets to allow for functions to be outsourced can be difficult to overcome and must be considered beforehand. Additionally in the planning & budgeting process, leaving wiggle room in cost planning is advised, as potential cost savings in the initial stages of switching to an outsourced can take time to come to fruition.
Ensuring quality standards are met during the transition to an outsourced business model is crucial. It can be easy to only focus on all the moving parts of an organization during this process and lose focus on the unchanging facets of the business. An organization cannot allow the goals of reducing costs or speeding up processes to interfere with delivering high-quality products or services. Again, this is done by sufficient planning beforehand to avoid teams being spread too thin and becoming overwhelmed.
Finding the right partner who understands the holistic business outsourcing picture, from both the business and technical points of view, will allow for a smooth transition as well as allow benefits to be better realized in the immediate term, and sustained in the long term. Experience and knowledge in just one of these outsourcing facets are not sufficient in this process. Partnering with a firm that has experience in all aspects of the business outsourcing process will allow for minimized disruption to the core business, prevent avoidable missteps, and maximize resulting operational capabilities, along with improvements to the bottom line.
BPO remains a crucial component of operations and contracting with a service provider can present solutions to fulfill various business needs. A major contributor to the growth of the BPO sector has been the willingness to better plan future business needs such as centralizing global processes and taking advantage of highly skilled outsourcing staff who are poised to offer tech-progressive skills. To further ensure growth, BPO organizations have diversified their offering capabilities to accommodate a diverse array of businesses, ranging from small actors to large multinationals.
When the time is right to partner with a BPO organization, be sure to do the following: define a clear target operating model, forecast the costs associated with the outsourcing process, create a quality control standard, and ensure the BPO organization chosen can understand and fulfill your objectives. Whatever your organization’s business process outsourcing needs are, Sia Partners is standing by with the capabilities necessary to assist in achieving your team’s goals for efficiency, risk mitigation and enhanced productivity.
We have developed our expertise in contact center transformation by assisting numerous organizations’ contact centers with digital transformation efforts, as they sought to navigate significant changes and unprecedented times.