Top 10 Advantages of Outsourcing One Should Not Ignore
Blog: MattsenKumar Blog
After the great recession in 2008, it was expected that 80% of outsourcing jobs that originated in the United States will vanish but only 9% of businesses stopped outsourcing after the stock market debacle.
A decade later, the outsourcing industry is thriving and it has completely evolved from what it was. Today, BPOs are not only about offering customer support but more about offering incomparable advantages of outsourcing, which we will discuss here in detail.
Is Outsourcing Good or Bad?
In 2018, the global outsourcing market was worth $85.6 billion, and ever since it has grown with a CAGR of 8%. Let alone the BPO industry, the defense, and IT sector are banking upon the advantages of outsourcing for developing the next-generation capabilities. The growth, popularity, and capital investment by varied central governments testify to the effectiveness of outsourcing.
While the biggest global economies garner benefits of outsourcing such as reduced labor cost, the developing countries are equipping themselves with the requisite skills and technology to render quality services. Job creation is yet another outsourcing advantage that developing countries have pinned their hopes on.
By listing outsourcing advantages that varied industries and economies are accumulating, we are making it easier for you to decide whether outsourcing is good or bad.
What are the Effects of Outsourcing?
78% of businesses from around the globe feel positive about outsourcing and have immense trust in their outsourcing partners. From literature and diplomatic perspective, outsourcing bridges the gap between two diverse cultures but economically it builds a reliable relationship between supplier and procurer.
Outsourcing from countries like Australia, Europe, and the UK has increased by 33% over the last 5 years. African countries are lining up to garner the advantages of outsourcing for building a tech-driven economy. On the other side, India, the Philippines, and Bangladesh are benefiting from outsourcing.
India offers quality English-speaking employees equally well-equipped with in-demand skills like coding, visualization, inbound customer service, and data processing at an economically effective price. The demand and supply game keep the global economy climbing new heights.
Together biggest economies and growing economies are building products and services for common users. E-commerce, BFSI, Cab aggregators, OTAs, and OTT platforms, are dependent heavily upon outsourcing for building quality businesses and rendering uninterrupted services.
Governments are now taking initiative in turning their countries into outsourcing hubs, the central government of India and Singapore are now promising tax holidays and rebates for organizations that establish a base in tier-2 and tier-3 cities. With outsourcing reaching tier-2&3 cities, the development follows as a trickle-down effect.
Top 10 Advantages of Outsourcing
Global giants like Amazon, Uber, and Airbnb have garnered benefits of outsourcing for kick-starting their global expansion plan. Through outsourcing, they have scaled effectively within no time from one country to over 15.
1. Industry-Specific Skills at Economical Price
An organization in the US with an expansion plan will need to have a huge customer service team that could cater to a global English-speaking audience round the clock. To hire, train, and maintain employees in the US is not only a lot tough but very expensive. Organizations are required to ensure minimum wage, which is very high when compared to other countries with relevant skillsets.
By taking the customer service process out of the United States, organizations are momentarily saving heavily by offering lesser salary and secondly, countries they outsource to provides them with tax holidays and tax subsidiary options, which makes those industry-specific skills even more affordable.
For example, an OTT platform with plans to expanding globally will need to have a proficient inbound customer service team to cater to customer queries from around the world. In a country like India, which is an outsourcing hub, governments are establishing special economic zones, where organizations are allowed to run offices 24X7, they are provided with additional security, uninterrupted power supply, and also business-friendly laws. The OTT platform can bank upon these advantages of outsourcing and cater quality inbound customer service to its global audience without spending a fortune.
2. The Overall Risk Involved Reduces Immensely
Building and offering services that monetary transactions and involvement of crucial documents like social security numbers or voter id cards come with its own set of risks and challenges. One data breach or one missing in document management can invite fines worth millions, and according to a recent study, 55% of organizations that were fined by global agencies never gained the trust of their customers back.
E-commerce marketplaces, Fintech players, and Cab aggregators that offer pay later facilities are required by governments to maintain financial records of users who access them. By law, organizations are bound to fulfill KYC requirements and ensure that their platform isn’t misused by abusers for funding terrorism or anti-government activities.
Here’s how organizations can benefit from outsourcing: Let’s consider a global e-commerce platform decides to outsource its document management requirements. A back-office process outsourcing service provider takes up the task of collecting financial and ID documents of varied customers.
The outsourcing agencies establish a connection with all the end-users, collects, verifies and maintains a safe record of all these documents. Often these BPOs are PCI and ISO certified, which renders the chances of a data breach null.
By collaborating with ISO-certified organizations, the global e-commerce giant reduces the risk involved and gained heavily. KYC outsourcing services are quite affordable and promise incomparable security, which is an underrated benefit of outsourcing.
3. Improved Focus on Core Processes
Hiring, training, maintaining payrolls, bookkeeping, transcription, and outbound welcome calling are repetitive tasks. These mundane tasks do not require the involvement of key stakeholders, which makes it easier for organizations to outsource them.
With lesser processes being handled at the central office of any MNC, executives and key stakeholders can keep themselves away from getting involved in day-to-day processes and focus on innovation, scaling, and brand reputation management.
A mobile phone manufacturer that caters to over 100 countries and sells over 10 million cell phones annually will need to have over a thousand inbound contact center employees just to assist customers with their warranty and exchange requests.
By letting a team of professionals from India handling these calls, organizations can truly tap into the advantages of outsourcing and
- Save huge office space
- Spend less on infrastructure
- Save heavily on corporate taxes
- Implement light-weight model
4. Onboard Competitive Advantages
One of the most underrated advantages of outsourcing to India is a competitive advantage the BPOs equip organizations with. BPOs in India have developed multiple arms where they are offering quality inbound, outbound contact center services along with back-office expertise in data cleansing and document management.
Consider an e-commerce player that decides to expand and cater to different regions of the world where people speak different regions. Now the marketplace is expected to hire employees that are proficient in varied global languages and can work according to varied time-zones.
Outsourcing to India can help such e-commerce players with everything from having agents that speak English, Mandarin, Japanese and German working as per the requested time-zones.
E-commerce players can also equip themselves with other competitive edges because outsourcing organizations in India are well-versed with back-office processes like document management, which includes KYC and data management, where data is processed for identifying underlying challenges and deciphering customer preferences.
By accessing data management, document management, and contact center capabilities under one roof, e-commerce players can truly take advantage of outsourcing for building global businesses.
5. Deliver Quality Customer Experience Every-time
There’s no doubt in labeling Customer Experience as the biggest key differentiator. The COVID pandemic proved that people are willing to pay additional fees just for a quality experience. In the post-COVID era, businesses will be looking forward to collaborating with outsourcing organizations that can continuously improve the customer experience graph.
Inbound customer service offerings are allowing organizations to stop worrying about the experience being offered to their esteemed customers. BPOs are training their employees effectively and are relying on state-of-the-art technology like live chat to route customers to solutions quickly.
With inbound customer service working round the clock, the customers can reach out to the businesses and get their issues resolved at their convenience. The changing norms of customer service demand organizations to offer an omnichannel experience, where customers can start from where they left last time on any device or channel.
Call center outsourcing solutions including live chat and email support are equipping organizations with multichannel and omnichannel capabilities, which reflects positively in the customer experience graph.
6. Laser-Focused Targeting
With multiple venture capitalist funded organizations trying to woo the same customer-base, organizations need to narrow down. With laser-focused targeting, organizations can reach out to potential clients and sell their products or services.
Let’s consider a cloud storage service provider that wants to grow its userbase. They are willing to offer free space for a limited period along with security features that no contemporary can provide.
Well, if organizations try to play on the price point, they are likely to lose in the long run. Customers will stick with them till the time, there are offers and freebies but with the VC money drying up, the loyal user base will also die.
With outbound lead generation services, organizations can rather target users that are looking for incomparable security features. Lead generation outsourcing equips organizations with capabilities to identify businesses and users that prefer privacy overpricing.
Organizations can take advantage of outsourcing lead generation to countries like India, where the overall cost of production is very low, but the quality is at par with international standards. This works as a two-way sword, first, pay less for services, and second gain high-paying clients for your sophisticated platform.
If we take an example from the recent past, we can see how Apple Inc has shifted its focus from marketing iPhones as a “feature-packed phone” to marketing it as a “deity of privacy”. The paradigm shift with a laser focus targeting can help businesses sweep past their competitors who are playing on the price point.
7. Improved Operational Control and Effective Reporting
During the early days of there were disadvantages of outsourcing, where agencies were unable to present an effective report or support the expenditure with a measurable return on investment. In the recent past, the advent of monitoring technology, evolving ISO norms, and the development of intuitive dashboards have turned those challenges into opportunities.
Today, organizations outsource processes because it is easier to hover on a monthly report submitted by a BPO that going from one desk to another collating data points and creating a dashboard.
The modern-day outsourcing centers are equipped with an intuitive dashboard and supported by smooth API integrations powered by ISO family certifications. Organizations can easily identify BPOs that have ISO certifications and collaborate with them to ensure that their data is safe.
8. Simplified Work Relationships
78% of organizations maintain a positive stance on their outsourcing partners. Outsourcing partners are offering incomparable advantages to businesses in form of constantly upgrading themselves with the latest skills.
In the recent past, varied outsourcing agencies have started offering custom-fit solutions. In this model, organizations reach out to outsourcing agencies with an industry-specific problem. The second party understands the underlying challenge and devises a tailor-fit solution.
Earlier, businesses used to contact Indian companies for contact center services and Singaporean companies for IT development projects but recent development has changed the status quo. Today, every BPO is developing its arm to help organizations find multiple solutions under one roof.
A simplified work relationship is perhaps one of the most underrated benefits of outsourcing that MNCs enjoy. MNCs are already troubled, they are expected to abide by the laws of every country they function in hence it is tough for them to focus on other mundane tasks. With outsourcing agencies taking up the job of innovation and strategy, MNCs are better-off tackling government and compliance agencies.
9. Improved Pace of Getting Things Done
One of the biggest advantages of outsourcing is that things get done even when the key-stakeholders are not available for a valuable contribution. Industry expertise available at affordable prices takes up the tasks of seeing through every process and in-fact they over-deliver to ensure the perennial flow of processes.
For an organization that believes in the asset-light model and has outsourced most processes, accomplishing huge tasks through an array of the department is a cakewalk. They can ask their outsourcing partners to get it done and all the wings of outsourcing agencies will swing into getting it done, this is such an underrated opportunity to get over their contemporaries and prime competitors.
Improved pace of getting things done can be visualized in varied other ways too including:
- Deploying live chat, email support, and inbound customer support to ensure quickly addressable of customer complaints
- Onboarding multiple partners from varied geographical locations simultaneously
- Ensuring data collection, entry, cleansing, processing and analysis continues parallelly
10. Shrewd Business Practices for Incomparable Growth
E-commerce, Fintech, and Digital service providers aren’t only the competitive domains in the contemporary world, the outsourcing industry is equally a competitive arena. The never-ending competition between India and the Philippines to emerge as the most preferred outsourcing destination grows on a day-to-day basis.
The competition has led to initiatives that have contributed to technological advancements that were impossible to expect if there was a monopoly. Today, BPOs are willing to put in the requisite effort just to retain the clients. Innovation, economic services, and reliable data management, you name it and BPOs are ready to offer it.
Such shrewd business practices are the additional advantages of outsourcing that nobody talks about. It is these minuscule changes that have led to the growth of the outsourcing industry and helped it maintain a positive outlook.
Data digitalization can be considered as the best example of this. BPOs are now offering data digitalization services where traditional businesses can convert their documented literature into digital format and use it for taking impactful business decisions.
Final Thoughts on Advantages of Outsourcing
400 unicorn start-ups worth more than $1000 billion are battling to impact the lives of common people. While a lot of these SMBs or start-ups are going to merge and create a monopoly, many will pivot and introduce a completely new service.
No matter what the founders and CEOs of these start-ups decide to do, they will need partners to carry these out. Outsourcing organizations from around the world are constantly improving themselves, adding new branches to their skillset, and creating tailored solutions for businesses.
The BPO trends like Omni-channel customer service and involvement of AI and ML in customer service are proving game-changers. Organizations that are trying to do everything on their own need to break free of the comprehensions and try outsourcing.
The post Top 10 Advantages of Outsourcing One Should Not Ignore appeared first on MattsenKumar.