Minimizing the Risks Associated with BPO Outsourcing
Business Process Outsourcing, or BPO, is expanding at an accelerated rate each year and exhibits no signs of slowing. Although some companies have doubts, it has not stopped the progress of outsourcing; specifically offshore outsourcing.
The present era of international economic competition is fierce, and the need for advanced customer service experiences and other back-office solutions continues to pick up. Consumers from all over now expect excellent service at every step in the buyer’s journey, and one false move by a particular company may result in its downfall. Outsourcing helps businesses deal with many of these challenges as it provides a superior customer experience, cost-efficiency, and access to specialized professionals.
Presented with this reality, we cannot understate the vital role of BPO companies. They help organizations provide efficient services. Nevertheless, just like with anything else in the business world, there are risks entailed with every undertaking and outsourcing is not an exception. There are several risks that companies – those already practicing offshore outsourcing or those who are planning to – should recognize.
Creating a healthy BPO relationship
BPO partners carry out their job on the grounds of a mutually-agreed-upon standard. They follow a stable and predictable workflow at agreed-on costs.
However, if the partnership deviates from these parameters, both sides will encounter problems. Businesses will begin to notice a decline in service, drop in revenue, and inefficiency in operations. These are the risks associated with an unhealthy BPO partnership. An incompetent BPO company will tarnish a company’s brand image and endanger its operating model.
Unfortunately, this is the effect of having incompetent BPO companies proliferating the business world. Companies who want to take advantage of what outsourcing can bring but are scrimping on their budget are at risk of hire low-quality BPO companies.
The real challenge that businesses face is how to separate the lemons from the great ones who can provide real leadership, a proactive attitude, and quality.
Risks of outsourcing
No matter how much research you do, carrying out a selection on contracting with an onshore or offshore service provider is much like purchasing promises.
You will need to trust your chosen partner to be committed to serving your business with the high-quality services that they promised. Here are some of the associated risks of outsourcing.
- Data protection
Security processes vary from country to country. That is why it is necessary to verify whether the vendors you have partnered up with have the type of protection that your business demands. When working in a global business, the risk of security exposures is high. It is wrong to think that this is not that much of a concern in offshore outsourcing. Data security must be enforced at all times
- Loss of business knowledge
Some institutions have business expertise that is inherent with the developers alone. This expertise could be a competitive advantage over their competitors in the same industry. You should thoroughly evaluate whether you should outsource such a knowledge base since doing so carries the risk of losing this to your competitors. Strict NDNCAs (non-disclosure, non-compete agreements) can be a starting point to help mitigate these risks.
- Failure to deliver
Having a backup plan in case the BPO company fails to deliver is always important. It seldom happens, but it does occur. You need to assess the various effects if it does happen. Will it make an impact on your business? What can you do if it happens? Evaluating these risks is necessary when outsourcing.
- Government policies
Government policies are a risk when offshore outsourcing. You need to ensure that the BPO company you have teamed up with adheres to the rules and regulations imposed by the local government. Often, the issue of transparency is most noteworthy here given that this is included in the USA Patriot Act.
- Differences in culture
Cultural differences could be a problem with offshore outsourcing. Although some countries, such as the Philippines and India, are adept at speaking the English language, there are some striking differences such as in pronunciation, cadences, and diction.
Some cultural distinctions such as communication style and work habits can also lead to future problems if not addressed up-front.
- Knowledge transfer
It takes a lot of effort to transfer knowledge from the client to the third-party organization. Companies have observed that during the initial stages of the agreement, there can be a decline in productivity. That is because most of the time spent during the initial stage is on training and often takes a couple of months for everything to get up to speed.
- Automation threats
BPO firms are increasing their dependence on automation, machine learning, and AI. It naturally raises efficiency. However, machines can be susceptible to errors. Skilled professionals should regularly check automated methods to avoid costly mistakes.
- Cloud hacking
Cloud-based platforms and infrastructure are common among BPO firms because they provide substantial data storage. However, there are risks with keeping all of this delicate information solely on the internet. BPO companies must employ absolute security and protection techniques to keep their cloud safe.
BPO is not just about reducing costs
Hiring a BPO company is an investment in itself. It is not just about reducing costs, but rather it is about the strategic impact your business can get out of it. You also need to take into account other goals like increasing flexibility, rerouting your resources to other business functions, or improving consistency when deciding whether outsourcing is right for you.
Ensuring operational success
To minimize risks, BPO partners need to show that their methods maintain quality and at the same time address inconsistency in quality over time.
You should establish a transparency and governance plan with your third-party vendor. There should also be a scheduled reporting method to track performance. You also need to research completely your potential partner before entering into a business relationship. Well-established BPO companies with a history of excellence will more likely produce your desired results. Research may include asking for testimonials from existing clients.
Risk management technology in the BPO industry
As far as dealing with security and risk management with their processes, BPO firms often leverage advanced technology.
Always remember that each BPO company is unique and will adopt different risk management technology. If you want to make sure that a company prioritizes security, you can make inquiries about the risk management techniques they use. A few things you can look at:
- Risk Assessment Software
Risk assessment software assesses and ranks possible risks to alert you when systems are susceptible to threats. It makes blocking malicious activities easier.
- Cyber Risk quantification Technology
CRQ technology takes cyber risks into a complete risk analysis. It is an advanced form of technology that forecasts risks in monetary terms. CRQ technology allows businesses to make smart decisions.
- Fraud Analytics
Fraud analytics relates to software that identifies unusual sequences in data and stops the fraudulent activity. Fraud analytics technology consists of audit command language (ACL), computer-aided audit tools (CAAT), and IDEA.
Conclusion
Nothing in this world comes without risks. It is just a matter of mitigating those risks so that you can reach your full potential. In choosing the right BPO partner, you do not have to sacrifice security, reliability, and trust.
Carefully consider the capabilities and credentials of the BPO firm you are hiring, then establish a long-term partnership with clear parameters. Only then will you have peace of mind knowing your brand is in good hands and you are able to reap all of the benefits of gaining back your time and money resources that BPO has to offer.