Five Things You Might Not Know About BPO

Five BPO industry secrets

BPO is a booming industry worth over $300 billion worldwide. Thanks to technological advances, BPO has grown in popularity over the past five years and employs millions of people across the globe.

BPO may seem straightforward: It begins with a company outsourcing some of its administrative and back-end tasks and thus enjoying cost benefits and increased productivity. There are many moving parts to this structure though. Here are five things you may not know about the BPO industry.

Key takeaways:

  • Business Process Outsourcing (BPO) is a lucrative industry worth over $300 billion.

  • BPO saves businesses time and money but there are elements you should consider before working with a BPO vendor.

  • There may be tax benefits to BPO.

  • You may encounter hidden costs such as set-up fees and upgrades.

  • You’ll have less control over outsourced tasks and may encounter communication issues.

  • BPO may pose a security risk.

  • BPO could make your company more agile.

1. There may be tax benefits when you outsource

BPO is meant to save your business valuable time and money. Those savings typically come in the form of reduced overhead costs associated with in-house services but may also be through tax relief. The U.S. income tax rate is 39.1 percent but when you outsource to other countries you’re likely to see a lower income tax rate. 

2. You could encounter hidden costs

Depending on the type of work you’re hoping to outsource, you may incur set-up costs. Most companies choose BPO for routine office work and administrative functions such as accounting, data entry, lead generation, payroll, benefits management, and analytics. There are BPO companies that specialize in these areas, meaning you’ll get top-notch workers trained for the tasks at hand. If you’re hoping to outsource tasks that require specific technology or customization, however, you may be charged a higher set-up fee.

Other hidden costs could include:

  • Currency fluctuations

  • Hardware and software upgrades

  • Renegotiating contracts

  • Vendor changes

Make sure you work with a reputable BPO company that will explain all the costs involved and will not charge you hidden fees. 

3. You’ll have less control over the tasks that are outsourced

When you outsource certain business operations, you can provide specific instructions and quality standards. A good BPO company will see to it that those instructions are followed and the standards met.

Any time a business function is not performed in-house, it always involves giving up a bit of control. Even as off-site workers adhere to deadlines, instructions, and standards, they’re still not subject to as much oversight as in-house workers.

There’s also the potential for miscommunication among in-house and off-site workers. You’ll be working with teams in different time zones which could lead to communication delays. Your BPO vendor may have a preferred method of communication you’re not used to (apps, messaging services) or vice-versa.

Miscommunication tends to happen at the very beginning but once the proper tools are put into place and the expectations communicated, the communication usually turns into smooth sailing. 

4. There’s the potential for security breaches

This is perhaps the most serious risk associated with BPO. If you’re working with a reputable BPO company, the risk of a security breach is minimal. Most BPO firms have security measures in place to protect client data.

However, when it comes to outsourcing information, there’s always a small risk your data could be used in unauthorized ways. Make sure your BPO company has a proven track record of handling sensitive client information.

If you’re outsourcing general administrative tasks such as lead generation, the security risks for your business are minimal. Accounting and other financial functions may pose more of a threat. While nothing is ever risk-free, your BPO company should be able to address your security concerns and put you at ease. 

5. BPO can make your company more agile

If you choose to use BPO, your in-house team may become more productive with the ability to quickly adapt to changing priorities. With the time and money you save, you’ll be able to focus on core business functions, whether that means generating more sales or adding more clients. And if the costs aren’t working in your favor, you can easily transition BPO functions back to in-house – just make sure you’ve given yourself an “out” in your contract, especially if you’re new to BPO or working with a BPO vendor for the first time.

There are always pros and cons to any business decision and BPO is no different. For most companies, the issues discussed above do not pose a problem since the benefits far outweigh the few risks.

Working with a BPO company

If you’re considering BPO and would like to know how it can help your business, our team of experts at DOXA can help. We know your business is unique and that’s why we deliver tailored solutions to meet your specific operational needs. We give local businesses access to proven global talent. Contact us today to learn more.

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