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While there are many benefits associated with business process outsourcing, it is important to remain fully cognizant of the challenges associated with the process before pursuing a business process automation implementation.
Manpower is certainly a considerable expense associated with particular aspects of BPO, such as managed services, and it is where companies will spend the bulk of their money. However, digital services such as e-invoicing solutions, remove the factor of human costs which would previously have been required for those processes to occur. Having robust documentation in place that maps out existing processes, recruitment, training and onboarding can minimise wasted spend associated with labour.
Transition and project management costs are another major factor. For the business benefits of BPO to be fully realised, the transition to an outsourced model must be as efficient as possible. The BPO partner chosen has a substantial impact on how efficiently the transition can be carried out.
With these elements taken into consideration, there are several factors that will ultimately influence total costs, including:
• Exchange rate fluctuations:
Prices can fluctuate considerably with a BPO partner located outside of the home country.
• Training duration and costs:
It may take longer to train someone overseas who is not already familiar with a company’s market or customers.
• Turnover:
Employees at large outsourcing companies may explore job offers with different companies. This turnover can produce delays while replacements are trained.
• Hidden costs:
Language barriers can add time spent on communication that would not be incurred when hiring in a company’s local area.
• Communication and productivity:
A BPO partner should hold relevant International Organisation for Standardisation (ISO) standards and certifications, and they should have experience in your industry or vertical. Service level agreements (SLAs) are also critical during an initial consultation and onboarding to reduce risk.
Outsourcing entails several potential risks that businesses must consider and mitigate effectively. One significant risk is the occurrence of unforeseen and hidden costs. These costs, such as language barriers and cultural differences within remote teams, can lead to operational inefficiencies. To address this risk, a robust risk management strategy should be implemented, encompassing comprehensive service level agreements (SLAs) with the outsourcing provider. These agreements serve to uncover and address any hidden costs that may arise during the outsourcing relationship.
Another critical concern is the protection of intellectual property, particularly in software development. It is essential to safeguard proprietary information and prevent its leakage to the outsourcing company. To mitigate this risk, non-disclosure agreements and stringent data protection measures should be put in place. These legal documents ensure that sensitive information remains confidential and secure.
Privacy and security concerns also loom large in the outsourcing landscape. Sharing sensitive data with a third-party service provider can compromise data security and compliance. To address this risk, it is imperative to select an outsourcing vendor that follows rigorous privacy and security protocols and compliances, thus safeguarding the privacy and integrity of sensitive information.
Lastly, knowledge transfer issues can emerge when there is a lack of effective communication and understanding between the outsourcing partner and the client company. To mitigate this risk, it is crucial to facilitate ongoing knowledge transfer processes and maintain clear communication channels. This ensures that information is effectively exchanged and that any gaps in understanding are promptly addressed. Effective risk mitigation in outsourcing necessitates comprehensive planning, the establishment of legal safeguards, rigorous security measures, and proactive knowledge transfer strategies.
Without proper planning and management, business process outsourcing could be more of a detriment than an advantage; for example, if you experience major communication challenges when offshoring to another country with a different culture, in a different time zone.
If customer call reps lack language fluency, their inexperience could hurt the customer service experience. If a vendor’s employees are constantly coming and going with new ones needing to be trained, your business may suffer. Or if your level of control drastically declines with business process outsourcing, you may not be able to ensure the same level of quality moving forward, which can damage your brand reputation in the long run.
It is vital that there is due diligence and research done before choosing a vendor to ensure quality delivery and avoid these challenges. It is paramount to success that correct scoping is done to ensure the proper systems for management are in place to make BPO a success.
While outsourcing can deliver operational and financial benefits, businesses should be prepared for several common challenges:
Differences in language, communication styles, and working practices can lead to misunderstandings if expectations are not clearly defined.
When transitioning work to an outsourcing provider, transferring business knowledge, processes, and documentation may take time. Without proper onboarding, productivity can be affected during the early stages of the engagement.
Maintaining consistent service quality requires clear service-level agreements (SLAs), performance metrics, and regular review processes.
Employees may be concerned about how outsourcing affects their roles and responsibilities. Transparent communication and stakeholder engagement can help reduce uncertainty and support a smoother transition.
Businesses can significantly reduce outsourcing risks through careful planning and governance.
Best practices include
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Offshore outsourcing can offer cost and scalability advantages, but organisations should consider challenges such as:
Working with providers that have established governance frameworks and local support structures can help address many of these concerns.
The challenges associated with outsourcing can vary depending on the business function involved.
Regardless of the function being outsourced, effective governance and partner selection are essential for long-term success.
Robotics and AI are playing a bigger and bigger role in modern business operations. According to a 2022 report from Gartner found that 40% of organisations are using AI in some capacity, and that number is expected to reach 60% by 2024
According to UiPath, “Robotics process automation is the technology that allows anyone today to configure computer software, or ‘a robot’ to mimic the actions of a human interacting within digital systems to execute a business process.”
Robotics process automation is an effective way to integrate with existing systems to automate any manual workflow and can be used in:
• Creating and delivering invoices
• Data reconciliation
• Quote to cash
• Data migration and entry
• Data validation
• Periodic report preparation and dissemination.
• Financial planning
• Bank statement reconciliation
• Daily P&L preparation
• Loan application processing
• Claims processing
• Appeals processing
• Customer account creation and onboarding
• Trade execution
• Auditing
• Compliance and fraud detection.
Procurement:
• Invoice processing
• Requisition-to-purchase order
Human Resources:
• Payroll
• Hiring
• Candidate management
Contact Centre:
• Customer service desk
Healthcare:
• Reports automation
• System reconciliation
Manufacturing:
• Bills of material (BOM) generation
Hi-tech & Telecom:
• Service order management
• Quality reporting
Energy & Utilities:
• Account setup
• Metre-reading validation
Besides these examples, robotics process automation can also be used to create effective workflows, such as in and out trays. This goes beyond simply plugging into existing processes, allowing users to actually create new workflows that improve operations.
The right outsourcing provider plays a critical role in managing risk and ensuring successful outcomes.
When evaluating providers, consider:
Selecting a provider with proven experience can help reduce implementation risks and improve long-term performance.
Not necessarily.
Most outsourcing challenges can be successfully managed through proper planning, partner selection, communication, and governance. Organisations that establish clear expectations and performance measures are often better positioned to achieve the benefits of outsourcing while minimising potential risks.
Understanding these challenges before implementation allows businesses to make informed decisions and build stronger outsourcing partnerships.
Outsourcing your business processes can be a great way to improve efficiency, reduce costs, and free up your time to focus on core business activities. But it's important to choose the right BPO and managed services provider to ensure that you don't compromise on quality, reliability, or security.
Canon Business Services has 25 years of experience in the field and a proven track record of success. We are a trusted service provider with customer satisfaction scores of 95%.
If you're looking for a BPO and managed services provider that can help you take your business to the next level, contact us today.
Language barriers and cultural differences with your outsourcing partner, who is often a third-party service provider or outsourcing company, can potentially disrupt the smooth functioning of your remote team.
When considering outsourcing, it's important to think about how it could affect your employees' satisfaction and productivity. If your outsourcing partner experiences high turnover, it might impact your business negatively.
Hidden costs, like communication barriers, are a common outsourcing risk. Ensure a thorough service level agreement with your outsourcing provider to uncover any potential hidden costs.
To maintain data security and compliance when working with third-party outsourcing vendors, address privacy and security concerns. Safeguarding intellectual property through non-disclosure agreements is crucial in an outsourcing model, especially for software development.
