Advantages and Disadvantages of BPO

How much happiness do we feel when someone helps us complete our task, substitute our work and fulfil in a limited time? This is a great thing, but this happens in two conditions. One is when our family, friends or known help us without their benefit, and the second is when we pay someone to help us. One of the common system in houses for help is hiring maid. We hire a maid to do our household chores and others like plumbers, electricians, gardeners etc.

We hire someone to complete the task, and this same rule is applied in business, generally known as BPO (Business Process Outsourcing).

Most people consider BPO as a call centre, but these two are different independent terms with other meanings i.e.

Call centre - A company or centralized department that handles telephonic queries (inbound or outbound calls) from current and potential customers. It is a part of one of the BPO services that handle particular company customers on the telephone. Call centres are support systems or agents from the company that handle the customers' questions and address issues regarding services and products.

BPO (Business process outsourcing)- It is a method opted by large businesses to make their parts functional. With this method, a business gives the contract to the third party to accomplish their business needs and shows the results. Large organizations or businesses hire other small organizations, firms, or contractors for their work proceedings. "Business process outsourcing is hiring a third-party service provider to make one or more business functions in the company." Here are some of the services provided by BPO:

• KPO ( Knowledge process outsourcing)

This outsourcing service provides advanced and highly skilled jobs for a particular business process, such as content creation, accounting and financial analysis, web designing and legal processes. KPO subsets are RPO and LPO.

• ITES (Information technology-enabled services)

In these services, BPO handles IT solutions over the internet and provides these services: technical support, production support analysis and service desk analysis.

• Some common types of BPO services are:

1. Data entry
2. Customer support services
3. Digital or normal marketing
4. Financial services
5. Advertising service
6. Health care and management
7. Human resource management
8. Supply chain management service

Some of the top BPO service providers across the globe:

1. Trinity
2. Genpact
3. Accenture
4. Invensis
5. IBM
6. Peak support
7. WNS

Currently, the BPO industry has grown tremendously, with millions of people working in it and increasing rapidly. Business contracts with BPO vendors mainly for back and front office operations. Sometimes organizations can outsource one or more functions.

• Back office operations include information technology services, payment processing, quality assurance etc.
• Front office operations include customer relations, marketing sales and grievance redressal.

Types of BPO

Advantages of BPO

a) No need to hire more employees

When you outsource your business, your help (contractor) will take responsibility for your work to be completed. You don't need to bring an employee to the company for functionality that will save you time and money on their training and other benefits.

b) BPO are cost-effective

BPO companies are cost-effective for a business because they offer impeccable services at pocket-friendly pricing. All the resources are managed properly in BPO to meet client expectations and requirements. With BPO services, a business can save up to 30% of the invested money.

c) Reduce the burden on employees.

Employees feel stressed and overburdened due to duties, making them sluggish too. BPO apply such a strategy in which employees work freely and efficiently.

d) Available 24/7 for smooth functioning

The BPO industry is growing at an extremely fast rate as it works 24x7 to assist big companies to work smoothly. It has day and night-shift working where employees are always available to solve the issues of customers. The BPO industry follows the US working pattern because monthly BPO works for the US companies in India.

e) Focus on core business.

After lending work, a BPO company can focus on its core competencies without any burden by the demands of bureaucracy. It improves the flexibility of the business.

f) Speed

Customer service is an immediate, speedy, responsive task required to improve efficiency. The business has time-bound activities that need immediate action, and BPO responds immediately and solves the queries in a limited period. It provides the solution as soon as possible and satisfies its customer.

g) Access to the larger talent pool

BPO allows a larger talent pool by hiring them. BPO is an easily accessible job for all age groups of people who can easily communicate. They invest in hiring of employees and make them work. BPO also support talent to a great extent. For example, India is a favourable outsourcing partner as it has a large pool of English-proficient and technical skill population.

h) Increase productivity

Business process outsourcing increases the productivity of any business by saving money. It makes businesses explore different channels to generate revenue. BPO hires skilled persons and gives them the training to sharpen their skills. Ensures the target completion in time with various benefits, which improves the business's productivity.

Disadvantages of BPO

a) It faces communication issues.

When BPO services are located offshore, they need help with languages. It is a great hindrance faced by BPO and business due to misinterpretation, time difference, language etc. For example, many US companies outsource their work to India, where they face communication errors due to the language barrier. Sometimes BPO won't understand what officials want, sometimes officials won't. In short, BPO services company faces the following:

• Language barriers
• Different levels of feedback within the agency
• Time zone difference

b) Have security issues

In outsourcing the business, you have to trust third-party vendors in the context of your data. Sharing data outside the organization kept it in vulnerable form. It is on the edge of being stolen by employees of the outsourced company and hackers. The worst case is when the data centre is available in another country because their privacy law may differ from yours. Data is on big risk, legal action would be difficult to take if something went wrong.

To deal with this business must appoint a lawyer that drafts a contract for protecting the company and BPO services in dealing with patents, copyright or private information. An agreement should be signed to do data privacy.

c) Hidden costs

During outsourcing work to a BPO company, an organization must sign a legal contract and bear legal expenses in case of a dispute or disagreement. The organization has to pay indirect charges in case of work delay and delivery date.

d) BPO is a learning curve

BPO employees must learn about the client company, it's needs and it's customers. It is important to start slow with the outsourcing process because the learning curve can disrupt the client's company product, shareholders or directors, and quality services and create customer concerns.

e) Overdependence on the BPO company

When a company outsources their work to a BPO company for a long period, it gets accustomed to its way of work and over-depends on them. Due to this company has to pay higher than usual costs if demanded by a BPO company.

f) Lack of transparency

Due to a lack of transparency, misunderstanding happens, and as a result, a company can lose control over the project. A company must clear all the things.

g) Monitoring issue

As BPO provider stays and works a thousand miles away, it is hard to monitor the performance of BPO staff. The expert has made some solutions to find whether the staff is working during working hours, whether does project took so long to complete and whether they are accessing unproductive websites at work. But still, only some things can be monitored due to long distances.

h) Need proper planning

BPO is an external service provider contracted by an organization to perform an essential business function or task. BPO has to prepare its infrastructure or work model so well that it can be opted for by organizations for their work, which they can trust. Several people work in a BPO therefore functioning of a BPO needs proper planning that includes:

• How to execute the task?
• What work is assigned to whom?
• Calculating how much profit the business will give
• Handling of staff with rules and regulations
• Preparing work model
• And other tasks too

i) Impact On Company Culture

When a business or organization plans to outsource their work, it must consider its impact on the company culture. Positive work culture results in a higher level of productivity but a negative cultural impact in these ways:

• It may confuse the employees about the company (why it's outsourcing a particular task)
• Effect on the daily workflow of the company
• Some employees of the organization may feel rejected

Conclusion: BPO (business process outsourcing) follows the golden rule of "happy customer, happy business". This is the motto of BPO. With advantages and disadvantages, BPO has established itself as the fastest growing and profitable industry among all competitors as a third-party specialist to carry out some parts of the business operation and process. Working with a BPO, a company must consider all these aspects.