Business process outsourcing services involve companies contracting the responsibilities and operations of various business processes and functions to an outsourcing firm. The outsourcing firm is sometimes located in the same country, which is called nearshore outsourcing, or in another neighboring country, when offshore outsourcing.
The processes and functions that are usually outsourced fall into the category of either front-end or back-end processes and functions. Back-end processes and functions consist of areas such as human resources, accounting, and finance. Front-end processes and functions consist of areas such as customer-related services. The following bulleted list contains commonly outsourced business processes.
- Document processes: This outsourcing includes marketing and communications, finance accounting, compliance documents, and customer facing.
- Human resources and training: Human resource outsourcing involves training and recruitment, management of databases, management of contracts as well as retention and attrition.
- Customer relationship management: Functions and processes outsourced are customer service and support, taking of orders, help desk support, product support, and market research.
- Intellectual property: Outsourcing includes licensing support, research, analysis of patents, and patent application management.
- Finance and accounting: Outsourcing of finance and account services includes expense management, credit and debit support, auditing, invoice management, accounts receivable and payable in addition to resolution of billing disputes.
- Supply chain management: Supply chain management outsourcing includes management of contracts, procurement, logistic support, warehouse management, and relationship management.
- Legal services: This outsourcing involves risk evaluation, mediation and arbitration, consultation, research, and support for legal functions.
- Security: Involves outsourcing for maintaining and securing data, equipment, and documents from theft. This can involve physical security, investigative services, computer and network security, and electronic security systems.
- Transaction processing: This outsourcing deals with the main function of payroll maintenance. It can also include processes such as research, payments, check and credit cards, stock trading, mortgage, loans, and insurance.
- Publishing: The outsourcing of publishing processes includes design, internet publishing, graphics, drawings, and administration.
- Research and analysis: Aspects outsourced include analytics on finance and data, market research, and primary/secondary research.
- Administrative support: This outsourcing includes conversion of documents, data entry, document scanning, processing of forms, and other secretary related tasks.
- Sales and marketing: Involves outsourcing activities relating to surveys, cold calling, pitches, and lead generation and nurturing.
There are numerous benefits to outsourcing business processes, and many companies are starting to outsource at least some aspect of their business functions. One of the primary benefits is reduction in cost. Through outsourcing certain functions, companies can save more money then if they were to operate the function in-house. This reason is also why many companies are choosing to outsource offshore, as offshore is usually a cheaper option for outsourcing.
Another benefit is that certain outsourcing organizations specialize in specific fields and can offer better service because it is their area of expertise. For example, if a company were trying to make their organization more secure and use the latest new technologies, then it would be wise for them to employ a firm that offers security professionals. The firm will better be able to provide the most up to date and accurate advice and suggestions on security because it is their specific niche. Furthermore, outsourcing enables an organization to concentrate on its core business functions. For instance, many companies do not consider human resource a core business function. So through outsourcing human resources, the company will be able to allocate more resources and time to their core processes that drive the company’s vision. This can lead to better performance and more revenue.
How to choose a business outsourcing company
First, companies must choose which non-core processes that they wish to outsource. The processes should not be essential to the vision of the firm, and the processes should have the potential to be re-engineered by the outsourcing firm in order for the organization to save money. Next, the hiring organization must narrow down the field of outsourcing firms based on certain criteria. Criteria that organizations should consider are expertise, cost, location, customer service, reputation of the outsourcing firm, and the transparency of operations.
The hiring organization should get quotes and look at the contracts that the outsourcing companies provide. The contracts should be read thoroughly and compared to see if there are any hidden costs or agreements that are not ideal for the hiring organization. Once there has been a thorough comparison of what different outsourcing firms can offer, then the hiring organization should make the final decision. Depending on the size of the organization, it may be wise to hire an outsourcing advisor that specializes in consulting organizations on choosing the best outsourcing firm to meet the needs of the organization. The advisor will typically also negotiate terms and contracts with the outsourcing firm.
Business process outsourcing companies
IBM Global Process Services
IBM Global Process Services is the largest outsourcing company in the marketplace today. The outsourcing processes that IBM offers to clients are customer relationship management services, finance and administration, human resources learning and recruitment outsourcing, and procurement and supply-chain management. IBM offers industry-specific processes for companies that are in the fields of banking, healthcare, government, telecom, and insurance. IBM has helped large companies such as GM, Yahoo, and Southwest airlines to meet their outsourcing needs. Working with IBM is beneficial because they are an established company that works to maintain a strong reputation.
Accenture is the next largest business process outsourcing company. They offer three fields of process outsourcing. The first field is cross-industry business process outsourcing, which includes engineering, finance/accounting, human resources, learning, procurement, and supply chain. The second field of business process outsourcing that Accenture offers are, industry-specific services such as credit services, health administration, insurance, network, and utilities. The third field that Accenture offers is bundled outsourcing services. Bundled outsourcing services involve Accenture re-engineering the operations of the back-office to reduce cost and to increase flexibility by merging together multiple business functions.
MphasiS is also one of the largest business process outsourcing firms. They offer industry tailored business processing services to industries such as telecommunications, banking, capital markets, insurance, and healthcare. They also offer business process services to enterprise companies that include transportation & logistics, manufacturing, retail & consumer goods, and energy & utilities. MphasiS emphasizes their established methodologies to their clients. They claim to have an established methodology for transition, transformation, BPO-IT integration, and steadygovernance.