How does business process outsourcing work?
Business process outsourcing (BPO) can be a useful tool to help streamline your business operations and keep your core staff focused on the highly skilled tasks you hired them for. If you’re considering outsourcing parts of your small business’s regular workflow, you may be wondering exactly how BPO actually works.
How does BPO work?
Business process outsourcing is all about identifying tasks that are taking up your and your employees’ time but not making the most of your skills, and paying third parties to complete those tasks instead. You might engage the services of an agency company that can complete a range of tasks in a given specialism – for example, customer service – or you might opt to work with a freelance agent who takes care of a single function, such as a bookkeeper.
What are the steps in business process outsourcing?
The exact step-by-step process for outsourcing business operations can vary from company to company, but it generally takes a similar journey. Below, we’ve simplified the process into four basic steps.
1. Workflow audit
Before you can outsource any business operations, you need to take a step back and analyse your current situation. Assess your employees’ skills and competencies, then compare those to the work they’re actually doing. Once you have an idea of which tasks you’d like to outsource, you can start to draw up a plan that involves prioritising which outsourced tasks would have the greatest impact on your current operations. For example, outsourcing a particularly time-consuming task as opposed to a simple, fifteen minute one will free up more time for you and your team to work on what you do best.
2. Research opportunities
Say for example that you’ve decided to outsource customer service, accounting and IT support. Now it’s time to look at the market. Chances are, there will be a wide variety of companies and freelancers out there who can cater to your needs, so you’ll have to narrow down the field. You might choose to use someone who’s local to your business premises to allow for face-to-face meetings and discussions. On the other hand, if your small business is remote, the location of your outsourcing contractor might not matter.
3. Striking a deal
Once you’ve chosen your third party (or parties), you’ll need to draw up a contract that outlines the work requirements and how you’ll remunerate the other party for services rendered. This should help to protect you in the event of work not being completed or being subpar, and it also reassures the third party that you’ll pay the agreed price within a set payment period.
Additionally, it’s a good idea at this stage to discuss other arrangements, such as how you’ll communicate and how data will be shared. These might not feature on a legal contract, but they’re important things to think about at the start of a working relationship.
4. Transfer of responsibility
Finally, once the contract is signed and the business partnership begins, it’s time to hand over the relevant tasks to your third party contractor and enjoy the extra working capacity to focus on your core business operations. There may be a few teething problems in the early stages as both parties get used to how each other works, but in time you’ll likely sink into a routine just as you would with a regular employee or department.
What business processes can be outsourced?
In most cases, BPO involves the outsourcing of time-consuming or non-core tasks. For example, a construction company might outsource call handling to an agency for two reasons:
- Because it takes up time they could otherwise spend working on a building project
- Because the task is best suited to someone with financial acumen
Therefore, outsourcing this task may allow it to be completed to a higher degree of accuracy, by someone with the specific skills necessary, and without wasting the time of those whose skills lie in other areas of the business.
Good candidates for business process outsourcing include:
- Marketing – search engine optimisation, social media management, events organising
- Customer service – telephone calls, live chat, emails, face-to-face
- IT support – server management, problem solving and upgrades
- Human resources – recruitment, wage handling, training or upskilling programmes
- Resource management – shipping and warehousing
You might also outsource highly skilled tasks if you don’t have anyone in your organisation who can complete the work. For example, translating is difficult to get right without the assistance of someone with near native fluency. One option would be to outsource translating work to a third party who has those skills.
As you can see, business process outsourcing can be helpful in a wide variety of ways. This is particularly true for small businesses with limited working capacity. Why not take some time to consider how BPO could be beneficial for your venture today?