HRMA 203
MANUSCRIPT OF Lesson 3: BENEFITS OF BPO
In Partial Fulfillment
of the Requirements for the subject
Business Process Outsourcing
Submitted by:
ABRENICA, Polivien Junel T.
ARNAIZ, Mariella Grace D.
BILLONES, Kristine Marie
BUE, Shaira Mae B.
Group 3 of BSBA-HRM 2-2N
Submitted to:
Mrs. Love Florendo-Revecho
May 10, 2024
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LESSON 3: BENEFITS OF BUSINESS PROCESS OUTSOURCING (BPO)
Overview
BPO is a strategy method whereby businesses outsource specialized
third-party service providers to handle non-core operational duties. Businesses
can then concentrate on their value proposition and key strengths. Businesses
can greatly optimize their operations, increase productivity, and cut expenses by
outsourcing non-core operational tasks to specialized third-party providers. This
strategic approach allows businesses to allocate more resources and attention to
their core competencies.
Learning Outcomes
After successful completion of this lesson the students should be able to:
1. Identify key benefits of outsourcing business processes.
2. Analyze how BPO can impact a company’s operations.
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Topic 1: Cost Savings
● It provides opportunities to save costs, boost productivity, and increase
competitiveness in the global marketplace.
● Through outsourcing, businesses can reduce overhead costs for things
like office space, equipment, and salaries for workers. When they
outsource everything to an outside service provider, they can save a lot of
money by only paying for the services they actually use. Additionally,
outsourcing to countries with lower labor costs can further reduce
expenses.
When companies save money by outsourcing tasks, it's not just about
spending less. It's also about having extra money to invest in important things
like: Marketing Ideas, Research and Development that they can figure out how to
make their products better or inventing new ones that people will love. and also
Product Roadmap which can plan out all the cool features and improvements
they want to make to their products in the future, making sure they stay ahead of
the competition.
Example:
● The Philippines is the preferred BPO destination for US Companies.
because the labor costs in the Philippines are much lower compared to
other developed countries. Besides, outsourcing firms in the Philippines
are reliable, produce high-quality people, well-equipped products, and are
prepared to provide world-class customer support to their clients.
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Topic 2: Focus on Core Business
BPO allows an organization to focus more of its resources on operations
that set it apart in the marketplace. Higher quality and better performance.
Because business processes are their primary focus, BPO providers are
well-positioned to accomplish tasks with improved accuracy, efficiency, and
speed.
As we all know, BPO is actually known as a third-party service provider,
wherein they offer services to companies that need assistance. In this way, it
allows the business to focus more on their core function instead of prioritizing
other non-core functions that will surely cost them a lot and might consume so
much time. Basically, this reallocation of focus can drive innovation, improve
customer service, and create a competitive advantage in the marketplace. It
enables the company to excel in areas that directly contribute to their value
proposition and customer satisfaction.By also focusing on the innovation or
development of services they offer, they can be able to quickly adapt to market
trends or consumer demands since the trends are rapidly growing and they
should be able to keep up so that they can compete with others. In addition to
that, if a company has a good image when it comes to managing their services,
this will surely give them a good image with other business partners.
One good example is the case study that was assigned to us, the case
study of GE and Genpact, wherein GE outsourced their non-core functions to
Genpact. And because of the collaboration, GE was able to achieve its goal and
focus more on their core functions, which they successfully improved while also
outsourcing their non-core functions to Genpact.
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Topic 3: Access to Expertise
BPO providers are professionals in their fields, and they bring a degree of
skill and experience that would be difficult or expensive for a firm to develop
within. This access to expertise can help to improve service quality, increase
efficiency, and implement best practices in business operations.
As we all know, BPO provides services that they specialize at, therefore,
the organizations that work with them have access to people who are
professionals in the services needed. An additional benefit of this is that
businesses can learn a little bit about managing, which will help them grow and
develop further and enhance day-to-day operations. In addition, outsourcing
some non-core operations to BPO firms will allow us to execute more precise
work, particularly in financial management and accounting.
Google is one example of this, as they mostly outsource to BPO providers
to match the necessary expertise and demand. They began contracting and have
always tried to identify the best suppliers and staffing partners in the world. They
formed contractual relationships with these outside organizations to provide a
particular service or to cover a short-term requirement. IBM and Accenture are
two outsourcing companies with which they have cooperated.
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Topic 4: Scalability
According to Hayes (2023), the term scalability pertains to the capacity of
a business to perform well even if there is a growing or increased amount of work
and can adapt quickly to market demands. Through outsourcing to BPO
companies, organizations achieve scalability by leveraging external expertise
and resources, enabling businesses to act more quickly and efficiently.
In addition, business process outsourcing (BPO) makes it possible for
businesses to customize the level of services they receive to suit their present
demands. This means they can adjust their operations to handle more demand
when it's high and reduce operations during slower times.
For example, during the holiday season, businesses typically experience
an increase in demand. This is particularly evident in the retail and e-commerce
industries, where individuals typically purchase gifts and businesses offer
limited-time offers and deals. At this point, outsourcing plays an important
function since it enables the company to accommodate and handle the growing
demand by choosing to outsource or scale up its customer service team. And if
the holiday season is over, they can scale down while still maintaining a high
level of service quality.
In general, business process outsourcing (BPO) companies are an
excellent choice for companies to ensure that they are ready to deal with
fluctuations in demand, sustain high service levels, and optimize income
possibilities.
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Topic 5: Technological Advantage
As for the last benefit, we have a technological advantage. BPO service
providers stay updated with the latest technologies and tools. According to the
trends and forecasts of the business process outsourcing (BPO) market by Tality
(2024), the pandemic triggered a digital transformation that pushed companies to
outsource part of their non-core tasks to gain a competitive advantage.
Outsourcing can greatly improve operational efficiency for companies.
Businesses can efficiently provide outstanding work to their clients by working
together with BPO companies that have extensive knowledge of the latest
technologies and are professionals in their field, as previously discussed.
IBM, a BPO company provides automation and AI services. In terms of
automation, a company can hire IBM to manage their records and documents
and optimize their workflow processes. IBM can automatically organize
documents, simplifying their retrieval, thereby replacing the need for traditional
data entry and storage. When it comes to IBM's artificial intelligence services, a
corporation can also hire them to develop chatbots. Using this technology can
assist the organization in enhancing their customer service, allowing them to
immediately assist their customers with their inquiries.
Overall, with the help of these cutting-edge solutions, businesses can
optimize their operations, increase their productivity, and maintain their
competitive edge in the fast-paced business world.
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Case Analysis Discussion
US-Based Energy Company’s Strategic Outsourcing Yields $14 Million
Annualized Savings in Customer Service
iQor, a leading provider of customer engagement and BPO integrated
digital services, was chosen by a Fortune 500 client in the energy industry as
their exclusive business process outsourcing (BPO) partner despite the presence
of several Gartner Magic Quadrant leaders in Customer Service. By partnering
with iQor, the client experienced significant improvements in various areas,
including agent skills alignment, new hire speed to proficiency, customer
interactions, staffing optimization, and operating efficiencies.
CHALLENGE
Due to regulations and labor agreements, the energy industry faced limitations in
establishing nearshore and offshore customer service centers.
1. Address soaring attrition and recruiting costs that were impacting CSAT in
its domestic operations.
2. Select a partner with a proven track record in the energy space that could
offer compelling strategic CX solutions through an efficient mix of
automation and people that would also lower costs while providing a
consistent and positive customer experience.
SOLUTION
The energy company joined forces with iQor to develop a strategy that would
create exceptional customer experiences and generate significant financial
savings. In the plan, iQor included two automation elements to address the
client's specific needs:
1. Workflow Automation
2. Customer Interaction Optimization
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RESULTS
By partnering with iQor, the client experienced significant improvements in
various areas. The program performance KPIs were optimized and scaled,
leading to improved efficiency and reduced costs for the overall service:
● Saved $14 million in annualized costs.
● Exceeded customer CSAT goals.
● Reduced per-piece resolution times to meet new optimized business
objectives.
● Cut overall customer email response times, improving CSAT and lowering
costs.
● Exceeded industry best practices for agent retention.
● Delivered on all aspects of multi-shore ramps to surpass customer
expectations.
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Summary
In the highly competitive world of business today, the key to success is not
just about being innovative, multitasking, and being involved in every aspect of
operations. While these qualities are certainly valuable, a truly successful
enterprise understands that it cannot do everything on its own. This is where
Business Process Outsourcing (BPO) comes into play. By partnering with an
outsourcing company, a business can focus on providing the destination while
the outsourcing partner takes care of the necessary steps to achieve success.
How does it work? Instead of handling every task and project internally, a
company can save valuable resources by outsourcing various tasks such as
customer care, data processing, payroll, IT support, and more. A reliable
outsourcing partner will also ensure that the right strategies are implemented to
meet the specific needs of the business.
Business process outsourcing offers numerous benefits that can be enjoyed by
companies: (1) Cost Savings, (2) Focus on Core Business, (3) Access to
Expertise, (4) Scalability, and (5) Technological Advantage.
Lesson 3 serves as a testament to the potential of outsourcing to drive
growth, enhance efficiency, and empowers businesses of all sizes. Through
strategic partnerships and a nuanced understanding of businesses' needs,
outsourcing becomes a powerful tool, allowing companies to not only
survive—but thrive in today's competitive environment.
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References
(1) Daily Tribune. (n.d). Philippines preferred BPO destination for US
companies. Retrieved from
https://tribune.net.ph/2022/11/23/philippines-preferred-bpo-destination-for-
us-companies
(2) Blagojevic, I. (n.d). Outsourcing Statistics. Blog post. Retrieved from
https://99firms.com/blog/outsourcing-statistics/
(3) BruntWork. (n.d). Advantages of Business Process Outsourcing (BPO).
Retrieved from https://www.bruntwork.co/bpo-advantages/
(4) Stranathan, I. (2020, March 30). Why Outsource to the Philippines?.
Retrieved from https://www.youtube.com/watch?v=KT86-2vp_lg
(5) Danieles, J. A. (2023, December 11). Examples of companies that use
BPO. Business Process Outsourcing Services | Unity Communications.
https://unity-connect.com/our-resources/bpo-learning-center/examples-of-
companies-that-outsource/
(6) Constantine, R. (2024, January 22). US-Based energy company’s
strategic outsourcing yields $14 million annualized savings in customer
service. iQor. Retrieved from
https://www.iqor.com/case-study/us-based-energy-companys-strategic-out
sourcing-yields-14-million-annualized-savings-in-customer-service/
(7) Hayes, A. (2023, July 28). Scalability: What a Scalable Company is, and
Examples. Investopedia.
https://www.investopedia.com/terms/s/scalability.asp
(8) Tality, D. J. (2024, January 24). BPO Trends and Predictions: Staying
ahead in a rapidly changing industry. Business Process Outsourcing
Services | Unity Communications.
https://unity-connect.com/our-resources/bpo-learning-center/bpo-trends-a
nd-predictions/
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(9) Digneo, G. (2023, March 29). The 23 top BPO companies in the world.
Running Remote. https://runningremote.com/bpo-companies/
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