BPO, in short for business process outsourcing is something that we all have heard about at some point in time or the other in our lifetime. It has long evolved from its original image as a ‘sweat-shop’ to becoming a strategic differentiator for businesses in the global arena. It is a major disruptor to the conventional structure and proceedings of businesses.
What is it?
When a business contracts out one or more of their business processes such as customer support or lead generation to a third party vendor, it is known as outsourcing. In general, it has two categories- back office outsourcing which deals with internal business functions such as billing, bookkeeping, and accounting. And front office outsourcing which is related to customer-centric functions such as marketing and support etc. To describe in a concise way, a business process outsourcing company focuses on reducing transaction costs and optimizing process efficiency while handling a large volume of transaction and engagements. One example would be the call center service provider companies.
The intention of this article is to explore and make aware our readers the various aspects and facets that surround the BPO industry.
Other than prioritizing on cost reduction, companies that outsource their business processes to the BPOs also focus on achieving the following as well:
- Improving process efficiency that results in a faster turnaround time and increased productivity.
- Emphasizing on the improvement of their core competencies such as more research and development on the company’s USP, development of new products and services etc.
- Strengthening and consolidation of their global presence and acquisition of new business territories and countries.
- Improved quality of work that can ensure less error and an increase in accuracy.
- Reduced operational and overhead expenses.
- Creating business values and strategic competitive advantages.
As the BPO industry deals with a multiple and diverse group of industries, so it has to have a flexible business model in order to cater to the various demands and requirements of a variety of companies. The outsourcing industry has come up with the following list of business models to assure flexibility:
Read Also: The various functions of Inbound BPO
The global delivery model
It is also known as ‘blended’ outsourcing as it is a combination of onsite, offsite, onshore, and offshore resources. It is the preferred model of large multinational business process outsourcing companies as it allows the work to be ‘multishored’ to the location where the optimal cost and employee efficiencies are aligned with a preset performance standard. It is also adapted to quick transfer of locations in case of disaster or any political unrest to ensure a continuous and regular flow of the business processes.
The hybrid model
This model excels in leveraging on both the onsite and offsite resources and their functional efficiencies to deliver a feasible service to its clients and hence, it is also known as the dual-shore model. Here, the vendor team works in synchrony alongside the client’s team. About 20 percent of work is done onsite by the vendor while the rest is done by the local team offshore to leverage cost, labor, and time-zone related advantages associated with outsourcing.
The offshore multi-sourcing model
This particular model of the business process outsourcing companies uses multiple offshore vendors to mitigate the monopoly of a single supplier. Along with having their own offshore operations, the users also collaborate with multiple outsourcing vendors. The partner vendors get first-hand training on the operational aspects of the process in the main hub center and apply their learnings in their spoke centers. Therefore, it is also addressed as the Hub-and-Spoke model.
The BOT model
The build-operate-transfer model is another business model of the BPO world where the client partners with an outsourcing company to set up and operate a foreign subsidiary. It has the option to transfer the ownership back to the client company after a specified time. The setup risks are completely borne by the foreign company which takes care of the costs and ownership of the business entity until the time when the client decides to take over.
The global shared services model
Also known as offshore insourcing, the shared services center or the captive centers operates based on the idea of ‘sharing’ within an organization or group. The assigned work for these centers comes from the company’s internal service operations resources. These centers can be run as independent businesses and have the benefits of a similar corporate culture, with comparatively much fewer control concerns than the conventional third party vendors.
The BPO industry is a huge multi-faceted industry that has a global presence. And perhaps the most intriguing aspect of this industry is that it influences the operations and productivity of almost all the other industries it deals with, it doesn’t matter if it’s a logistic, health care, or a tech company. There are many more dimensions to the BPO industry that cannot be summarized in an article but I believe the above-mentioned information is adequate to instigate a sense of interest among our readers.