From the time outsourcing was formally identified as a business strategy in 1989—thanks to Eastman Kodak’s well-publicized deal with IBM—the industry has experienced significant and sustained growth. In fact, the global Business Processing Outsourcing (BPO) market amounted to 92.5 billion U.S. dollars in 2019 alone.
Once looked at as simply a cost reduction strategy related to routine back office functions, the evolution of the industry is now allowing companies to become more agile, efficient and effective by tapping into highly complex and innovative technologies and services provided by BPOs.
For example, here at Servicing Solutions, we provide back office services but it goes far beyond that. We play a major role enabling our clients to increase efficiency, and the customer experience by leveraging powerful analytics to deliver actionable insights, inspire innovative business solutions, and enable clients to make better business decisions. Often, we introduce artificial intelligence to augment agent performance, improve compliance, and deliver better customer experiences.
This industry evolution prompted the highly respected Deloitte to comment:
“Organizations are recognizing that disruptive solutions can revolutionize the way they do business, and that buying capabilities in the marketplace is generally faster and more scalable than developing capabilities internally. Outsourcing is about collaborating with partners in the marketplace to integrate services an organization cannot quickly build on its own to innovate, transform, propel its growth, and unnerve its competitors.”
If you’ve thought about outsourcing but still haven’t taken the leap, here are seven key areas of consideration for your business:
- Strategic Impact: While you’ll still maintain control over outsourced functions to ensure that they align with your strategic objectives, you’ll be able to continue doing what made you successful in the first place…focus on your core business.
- Business Impact: The right BPO will be a champion of flexibility and agility, offering custom and innovative solutions that address and improve a known business need within your organization.
- Financial Impact: While cost is no longer the primary driver for most businesses who outsource, it remains an important benefit. You should expect reductions in both fixed and variable costs, most notably IT and labor.
- Relevant Knowledge: The right BPO will have “walked in your shoes.” In other words, they’ll bring years of experience within your industry to the table. Instead of a drawn-out learning curve, they’ll offer advice and solutions based on that experience…right out of the gate.
- Scalability: Many companies in hyper growth modes choose to partner with a BPO, and for good reason. Building out entire internal teams or adding new functions and capabilities is a costly and arduous process, at best. Outsourcing will allow you to drive continued growth faster and with lower costs.
- Transparency: It is imperative that companies understand all risks related to their reputation, finance and operations during a transition to outsourcing. The right BPO will operate with full transparency so that you understand these risks and work together to mitigate them.
- Transactional vs relational: Significant consolidation in the industry over the past several years have caused many BPOs to lose focus on the value of the customer experience. Today, BPO’s are often criticized for creating rigid business models designed to reduce their own costs, causing customer engagements to become transactional in nature rather than relational. These experiences typically leave customers disappointed and never wanting to do business with the company they represent ever again. For most businesses, customer relationships are the main differentiator from their competition. When choosing the right business partner, make certain their business model aligns with yours.
In a future blog post, I’ll go into more detail about how you should approach selecting a BPO. In the meantime, I’ll leave you with a final thought from Deloitte about outsourcing:
“History has shown that it is difficult to catch up if you ignore or delay acting on such disruptions. Those who see this as an opportunity to execute real change, even when it may cost more in the short-term, will be far better positioned to gain competitive advantage in the long run. For those who don’t, they risk getting left behind their more nimble competitors.”
If you’re ready to be the company that your competitors fear being left behind, I’d love to chat. In the meantime, you can learn more about us at www.servicingsolutions.com.