What is BPO?

Business Process Outsourcing is hiring external businesses to deliver a task that you otherwise had to do inhouse and has been around for many years, but has with the introduction of the Internet and globalisation taken a new dimension. Many large businesses have chosen to outsource some of the activities, simply so they can focus on their core business. Companies such as Microsoft have outsourced not only much (if not nearly all) of their high end jobs such as software architecture and development to outsourcing companies in India, but also their customer service. Large companies that operate in Australia are also using BPO to a large extend. Hutchinson, Vodafone and Telstra have outsourced a great deal of their customer service to call centre locations in India and there are too many other examples to mention.

The trend is very clear, many if not all large companies choose when possible to outsource and they all have one thing in common. Cost of labour. No Australian, American or Western European call centre can compete with labour costs of less than $10 AUD an hour. Sure, the customer may experience an operator who speaks with an accent, but when you can save over 50% in costs, it is worth while.

Why should small business outsource

Clearly the large companies benefit from this, but why cant medium and small businesses copy the large companies? They can, but for some reason they choose not to. Business owners who have spend their life building their business may not see outsourcing as a viable option for their business, because it will not fit into their business model, which is very similar to the way many business owners were regarding the Internet and email some years ago. Outsourcing may not reach the same level of popularity as the Internet, but there is little doubt that the businesses, who chooses to focus on their core business and outsource the non core activities to experts will become more competitive, simply because they do not have to allocate time, money and dedication to activities that does not contribute to the bottom line.

The dangers of outsourcing

Outsourcing is not always the right answer and it is important to choose the right outsourcing provider with care. The biggest danger is if both parties expectation does not match each other. It is therefore essential that the processes are properly defined (and subsequently followed) or it is a recipe for disaster. It is important to find a BPO which knows what it is doing and a good indicator is to ask for references, (though these can be rigged as well).

A more reliable indication is to analyse the process documentation and ask for a testing period, prior to going live. This serves several purposes:

1) Process documentation indicates the level of quality, which can be expected

2) Testing period is always required as there will always be teething problems, when two organisations are starting to work together. Always allow for enough time to test and do not be afraid of asking for additional tests if you are not convinced.

En essence, outsourcing can be very beneficial for any business, small or large, but it is vital that proper research is done prior to commencing to outsourcing.