What We need to Know about Business Processes Outsourcing (BPO)

The use of BPO has now increased immensely that all sorts of companies

What is Business Process Outsourcing?

Outsourcing of the Business Process (BPO) is a mechanism by which third-party agency can be contracted for different business-related operations. Although BPO was initially only applicable to production companies, such as manufacturers of soft drinks, the model now has even extended to the outsourcing of services.

For instance, payroll is a task that is performed regularly by BPO. This is one of the most frequent activities businesses do as well. Companies may opt outsourcing to a firm, which specializes in handling payroll instead of operating a full payroll department. Other companies may choose RPO (recruitment process outsourcing), which means find an external vendor to handle all their recruitment process, from searching candidates to on-boarding and even after employees leave. With RPO or BPO, businesses could save capital, energy, and time in development. Organization will focus on the business aspects while taking advantage of the expertise of the outsourcing company. 

Benefits of BPO

Organizations which undertake Business Processes Outsource can anticipate potential profits. The traditional advantages cited by BPO advocates include:

Financial benefits: outsourced operators are capable of conducting business processes at efficient rates, eliminating overheads cost. For example, businesses can opt to use mass recruitment service to quickly find qualified candidates, which can help employers to operate and optimize their budget more efficiently.

Concurring benefits: BPO allows companies to outsource processes that are not the center of their business or missions, allowing organizations to invest more funds on their operations on the market. For example, companies can use employer service – a segment of RPO to shift their legal responsibility of hiring & managing employees to a third vendor. 

Higher consistency and performance: As most BPO providers carry out the particular processes to be engaged, they would theoretically concentrate on the provision, oftentimes with greater precision, reliability, and agility.

Faster access to advanced technology process technologies: BPO suppliers are also more likely to accelerate in advancing and innovating in their field. Additionally, they are willing to engage in emerging process automation techniques that could stimulate work efficiency, cost, and consistency – advantages that flow back to companies contracted with the provider.

Extended coverage: Outsourced service providers could cost-effectively increase a company’s efficiency. For instance, a call center, by contracting with a partner with the existing around-the-clock functions, will be able to provide the service faster and more efficiently.

Challenges of BPO

Apart from the benefits, BPO-based entities often have possible challenges. The following are possible problems:

Security violations: Organizations have to establish technology links between themselves and their service providers, and organizations also have to exchange confidential and/or controlled data with their service providers, which are all potential risks.

Over-reliance on the external provider: When engaging with a BPO company for a long term, an organization can become accustomed to the way they work and tend to be overdependent. 

Increased interruption potential: A company must also address issues that might disturb the partnership with an external supplier or permanently terminate it. It includes financial or job issues for the outsourced service provider, geopolitical uncertainty, natural disasters or economic shifts. Therefore, organizations need to be aware of these risks and formulate methods to manage their business sustainability and disaster recovery (BC / DR).

As Vietnam’s leading HR consultancy firm, Talentnet applies state-of-the-art technologies to its payroll framework with strict safety, profound understanding of labor law and associated HR solutions. If you’re looking for a BPO Vietnam partner, please contact us today for more details.