The Good, the Bad, and the Ugly Sides of Business Process Outsourcing

October 17, 2019
min to read
Jacob Thomas
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Have you considered delegating certain business tasks to outside vendors? There are several distinct benefits to the practice. But there are also a few disadvantages. How do you decide if business outsourcing is right for your company?

In this article, we take an honest look at the good, the bad, and the ugly sides of outsourcing business tasks and processes. By the end, you'll know if outsourcing will benefit your company or not. Let's dive in!

What is Business Process Outsourcing

First things first: business process outsourcing, often shortened to just BPO, is the practice of delegating specific business processes and tasks to outside vendors.

Business Process Outsourcing pros cons
BPO has both benefits and disadvantages for you to decide between.

In most cases, the processes and tasks outsourced will be supplementary, rather than core, functions. A few classic examples include payroll and accounting duties, data entry jobs, lead generation activities, and the vetting of applications.

With the development of advanced technologies and the continued dominance of the internet over the past few years, business outsourcing has grown in popularity. Companies of all types and sizes, from fledgling startups to Fortune 500 mega-corporations use it to gain an edge, while reducing costs and remaining agile.

In the next section, we'll begin to look at the good, the bad, and the ugly sides of BPO to help you decide whether it's right for your company or not.

The Good in Regards to BPO

business process outsourcing (BPO) pros
There are a lot of important advantages to BPO.

Let’s start with the benefits of business process outsourcing. There are many! Some of the more prominent advantages include:

1. Increased Productivity

BPO services increase productivity in two main ways. First, they allow companies to offload certain tasks and complete others, thus getting more done in less time.

Think about it, if Stan needs to balance the books and source new leads, and each task takes two hours, Stan needs to allocate four hours of his day to both tasks. But if he were to outsource lead generation to a qualified vendor, he could get the same amount of work in just two hours, making him twice as productive as he would have been before BPO outsourcing.

Ans second, most BPO services specialize in the tasks and processes they complete. Which means that, returning to our previous example, tasks that take Stan two hours to complete might only take his BPO service an hour. This increased efficiency is invaluable.

2. Lower Overall Costs

Business process outsourcing can also lower overall costs for companies. They won't have to hire nearly as many in-house team members who require full-time work, benefits, insurance, and other employment perks that cost employers money.

Another advantage of business outsourcing in regards to finances is the fact that companies can utilize work forces in developing countries where the cost of living and average wages are much lower. Would you rather pay $9 an hour to get business tasks completed or $15+? It's a no-brainer! BPO gives companies the ability to pay lower wages in an ethical way.

Lastly, contracting a vendor to accomplish business tasks gives companies financial flexibility. They can hire out work when they need to and terminate the service when it suits them.

3. Better Business Focus

Every company has core business propositions — things that set it apart from competitors and keep customers coming back again and again. By eliminating functions outside of these propositions via business outsourcing, organizations can focus their energies on the more important tasks and initiatives that bring in revenue.

For example, a software company could focus on improving its solutions and building new ones, not menial data entry tasks.

4. Ability to Stay Agile

Finally, business process outsourcing allows companies to stay agile, ready for any unexpected turns in the market or economy. By becoming more productive, lowering costs, and focusing on core business propositions, your organization will be better prepared for the unexpected.

If the market changes and certain business processes become obsolete, you can simply stop outsourcing those tasks. If the economy takes a dive, you'll be more financially stable because your costs are lower.

The Bad in Regards to BPO

disadvantages of business outsourcing
There are a few potential disadvantages to BPO.

While there are many advantages to business process outsourcing, there are also a few drawbacks that you should be aware of before investing in a BPO service. Most notably, business process outsourcing will give you and your company:

1. Less Hands-On Control

When you outsource business processes, you naturally relinquish some control. Yes, you can provide oversight, strict instructions, and quality standards that should be met. But at the end of the day, a contractor will work offsite and complete tasks the way they want to.

The good news is, if you don't like the way a BPO service handles the tasks you delegate to them or the results they present to you, you can terminate your working relationship. You can then look for another business outsourcing provider or bring the process back in-house again. You still retain full control in that regard.

2. Potential for Miscommunication

When it comes to business process outsourcing, the chances of miscommunication, at least at first, are high. It's one of the biggest drawbacks of BPO.

Miscommunications can happen for a variety of reasons:

  • Different Time Zones: While working with professionals in developing countries will allow you to ethically pay lower wages, it also means you'll probably be hiring people in different time zones. This can make communication difficult and prevent you from contacting your BPO provider at certain times.
  • Preferred Communication Methods: When you build an in-house team, you can choose the methods of communication. This isn't always the case when outsourcing tasks to a vendor. What if you prefer email and the BPO services you work with use Slack? You might have to learn how to use a new tool.
  • Reliable Internet Access: Internet connections go down every day, in every corner of the world. But if you partner with a BPO service who operates in a country with poor internet capabilities (or employs workers who do) your outsourced tasks might get delayed, which could disrupt your workflow.

3. Possibility of Security Breaches

Anytime you let outside forces into your company, you open it up to possible security breaches. This is also true of business process outsourcing. Now, the magnitude of a potential security issue completely depends on the level of access you give the vendor you choose to work with.

For example, if you only outsource sales lead generation, the risk to your business is minimal. At the most, a vendor will have access to a few online accounts and software tools, all of which you should be able to retain ultimate control of and only grant them limited user access.

Were you to outsource bookkeeping duties, on the other hand, your vendor will have an intimate knowledge of your company’s inner workings and financial standing.

When it comes to BPO and security, you have to decide what you’re comfortable with and when sharing private details is worth the benefits listed in the section above.

One way to offset the risk of security breaches is to only working with reputable, trustworthy vendors — the kind who have proven that they're not trying to take advantage of their clients. This will help to ensure your company’s private details remain protected and under your control.

The Ugly in Regards to BPO

business outsourcing ugly truths
BPO might not be right for every company because of a couple of "ugly" truths.

What about the ugly side of business process outsourcing, AKA the reason why some folks are vehemently against the practice? To be perfectly honest, some companies will encounter significant issues when attempting to outsource business processes. Here are a couple of them and the kinds of companies that might be affected:

1. Higher Setup Costs

This "ugly truth" doesn't apply to every business. In fact, we'd say that only specific businesses who are trying to do certain things will run into this problem. If, for instance, the processes you're hoping to outsource will require an extensive amount of setup, customization, and technology to perform properly, you will incur high costs.

Fortunately, most businesses just want to outsource simple, albeit mundane, tasks that don't require much in the way of setup or extra investment.

2. Less Infrastructure

Building your entire business via BPO is kind of like building a house on rented land. You don't own every moving piece which means you can't control every outcome.

For most companies, this isn't a problem. The advantages of business outsourcing are too great to pass up. But for others, less infrastructure may be a sticking point. Some companies would rather build internal teams and keep all important business processes in-house.

How to Make Business Process Outsourcing Work for Your Company

Business process outsourcing (BPO) benefits
BPO will benefit your company if you follow a few best-practices.

So how can your company take advantage of business process outsourcing and enjoy its many benefits while minimizing the bad and ugly sides of the practice? We have a few ideas for you:

1. Know Your End Goal

Why did you become interested in business process outsourcing in the first place? Was it to get more done in less time? Maybe it was to save money, or to remain agile in a swiftly changing industry. Whatever your reasons, use them as your North Star. 

Yes, you may have to give up some control and guard against potential security risks, but if business process outsourcing helps you achieve your big, overarching company objectives, then these are small prices to pay.

The key is understanding what you gain via BPO and what you lose, and making sure that you still come out on top. The only way to do that is to first know what you’re trying to achieve by outsourcing business processes.

2. Outsource the Right Tasks

One of the absolute best things you can do to help your company succeed with business process outsourcing is to only outsource the right tasks.

This begs the question, which tasks are right and which are wrong when it comes to BPO? At the end of the day, you’ll have to answer that for yourself but in general, we suggest only outsourcing secondary activities and processes. In other words, tasks that don’t align with your company’s core business propositions.

For example, a marketing agency’s core business proposition is to improve the visibility of their clients and generate more quality leads for them. This is what they’re paid to do. But tasks such as bookkeeping, data entry, and appointment scheduling, while necessary, don’t require the marketing company’s expert skills. They’re activities that any low-wage worker can accomplish and are perfect tasks for outsourcing!

3. Know Your Budget

If you don't have a solid figure in mind before enlisting the help of BPO services, costs can quickly get out of hand. If you're not paying attention, you might end up paying more to delegate tasks than to have them completed in-house.

While this is a rare circumstance, it is possible and should definitely be guarded against. Keep a close eye on the amount of money you spend on BPO and the level of value you receive in return. If the scales ever start to tip to your disadvantage, either readjust the way you're outsourcing or cease outsourcing altogether.

4. Take Precautionary Measures

Last, but certainly not least, it's important that you take precautionary measures when engaging with BPO services. For example, we wouldn't recommend signing a long-term contract with a specific vendor unless they've proven that they're reliable and you enjoy working with them. Even then, we suggest having some kind of "out" just in case things take a turn for the worst.

Other precautionary measures to take include not giving outside contractors the "keys to the kingdom" in the form of uninhibited access to your business accounts and tools, and setting crystal clear quality standards before working together.

The Invisible BPO Solution

At this point, you should have a good idea of whether or not BPO will work for your company. If you think that it will, we suggest outsourcing through Invisible Tech.

Our platform is the perfect blend between cutting-edge technology and human touch. By combining automation software with highly-trained, low-wage human workers from developing countries, we're able to quickly boost productivity for our clients in an affordable way.

Here's how our system works:

  1. Create your Invisible account and choose the subscription plan that works for you.
  2. Delegate tasks through the Invisible system and our tech-backed team will get to work.
  3. Monitor each delegated task in the Client Dashboard to see how it's progressing.
  4. Receive your deliverables and enjoy the boost in efficiency that Invisible gives you! 

Whether you need to outsource sales lead generation duties, want help vetting applications for a new position at your company, or need to quickly accomplish some other generalized business process we can help. Contact our team today for a free demo today.

In Conclusion

For many companies, business process outsourcing presents a plethora of benefits. But it's important to realize that those benefits come at a cost.

Yes, BPO can boost productivity, lower costs, help you focus on core business propositions, and make you more agile. But it will also force you to give up some control, present more opportunities for miscommunication, and open your business up to potential security threats.

Whether BPO services are right for your company is up to you. But now, after reading this article, you can make your decision with confidence, knowing you have all the facts.

Hayley Darden Marketing Invisible Technologies
Jacob Thomas
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