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BPO Risks and how to mitigate them (Business Process Outsourcing)

Blog: Flokzu

Business process outsourcing (BPO) is the delegation of one or more IT-intensive business processes to an external provider who, in turn, owns, administers, and manages the selected processes based on defined and measurable performance metrics. This Gartner definition identifies the main elements and also evidences the existence of BPO risks.

In this article, we present an introduction to BPO, with concrete examples, the typical benefits to be gained, as well as the risks faced and how to mitigate them.

Concrete examples of BPO

In general, BPO initiatives can be classified into two categories:

Benefits of BPO

Some of the most common benefits of BPO are:

In addition to benefits, there are BPO Risks.

BPO Risks

The top three BPO risks identified in this interesting article from the University of North Carolina are:

Hidden costs are a relevant risk, which in many opportunities is not taken into consideration when evaluating the BPO initiative. Many times, informal or superficial analysis of the subject, yields very promising initial results, with cost savings and efficiency improvements. But then, when the service starts to be provided, unforeseen events, additional resources needed, need for more hours, etc., appear.

The impact on customer satisfaction is perhaps the risk that is most common to identify and try to mitigate. It is difficult to hide from the customer that you are dealing with a person who is in another country, and who may not share your customs, language, way of expressing yourself, etc. This risk can be mitigated with significant training and proper localization of outsourcing centers, which of course, can lead to cost overruns (and we return to the previous point).

The last point, which is the loss of process visibility and control, is a risk that is difficult to mitigate without the right tools. The only long-term solution is to have formal business process management tools (BPM – Business Process Management), which we will go into in more detail below.

Flokzu BPM mitigates visibility and control risks

For the last major risk identified (loss of visibility and control of processes), having a BPM Suite allows to mitigate it completely. This is because:

In short, BPO can be a great alternative for several situations. However, it induces some risks that need to be managed. One of the main ones, which is the lack of control and visibility over the outsourced processes, can be mitigated by using Flokzu BPM for their definition and execution.

The post BPO Risks and how to mitigate them (Business Process Outsourcing) appeared first on Flokzu.

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