Business Process Outsourcing: An Introduction
Small and medium-sized businesses (SMBs) face unique challenges. It’s more critical than ever to control costs, access top-tier talent, and scale effectively to compete against larger, more established competitors.
Connext Global helps SMBs expand their capabilities through outsourcing solutions in the Philippines, enabling businesses to achieve more with less while maintaining quality and efficiency.
This whitepaper explores why outsourcing to the Philippines is a strategic move, outlines the process for successfully outsourcing, and provides an overview of the roles that can transform your operations.
Business Process Outsourcing: Defining a Solution for SMBs
Business processes are the functions that allow a company to operate. Many of them occur quietly in the background, like accounts payable or recruiting. Others are more central to the customer experience, like customer support.
Regardless, these processes require certain elements to be in place, such as human talent and specific technologies. Often, those are out of reach for small and medium-sized businesses with limited budgets. Business process outsourcing (BPO) helps SMBs get around accessibility, affordability, and scalability-related issues hindering their success.
According to Forbes, business process outsourcing “happens when a company outsources entire business functions to be handled by another company”. There are well-established examples of this, such as outsourcing payroll to a payroll service provider. However, BPO handles more than just back-office functions. It can also be used to access front-office functions, such as customer service or sales.
Today, BPO has evolved into three distinct types: onshore (outsourcing to a firm within the company’s country), nearshore (outsourcing to a firm in a country nearby), and offshore (outsourcing to a company overseas). Of the three, offshore business process outsourcing offers the best combination of affordability, access to human talent, and scalability.
By the Numbers: A Look at Today’s BPO Industry
Popular Outsourced Services:
- Accounting and Finance: 37% of small businesses outsource accounting tasks.
- IT Services: 37% of small businesses outsource IT, with cybersecurity and helpdesk functions seeing high levels of adoption.
- Customer Support: The Philippines is a top choice for outsourcing customer service due to its skilled, English-speaking workforce.
Why the Philippines?
The BPO sector contributes about 9% to the Philippine GDP and is a preferred destination due to cost efficiency and a large, English-proficient talent pool. Industries like banking and finance, media, telecom, and retail dominate the country’s outsourcing services. However, businesses can outsource many other processes to Philippine partners, including critical back-office functions, such as accounting, recruiting, and even medical billing.
The “Why” of Outsourcing Business Processes
Why might a business consider BPO in the first place? What would drive a small business owner or the decision makers within a medium-sized business to take central business processes and offload them to a partner?
Cost Savings
The Philippines offers a significant cost advantage over onshore or near-shore outsourcing options. Labor costs in the Philippines are substantially lower than in Western countries, allowing businesses to allocate resources to other strategic priorities.
Access to Skilled Talent
The Philippines is home to a large pool of English-speaking professionals proficient in various domains, including customer service, accounting, healthcare, and IT. This ensures that SMBs can access experienced talent for rates far less than what they might pay in their home nations without sacrificing expertise.
Focus on Core Competencies
By outsourcing non-core functions, businesses can concentrate on activities that drive innovation, growth, and market differentiation. A less fragmented workforce is more focused, allowing businesses to enjoy faster growth, overcome challenges with agility, and compete against larger businesses with greater ease.
Scalability
Outsourcing provides the flexibility SMBs need to quickly scale their workforce based on demand, whether expanding operations or streamlining during slower periods. Businesses can maintain their core staff and scale up or down as necessary to deliver better service, handle IT-related tasks, deal with accounting and billing-related needs, and more.
24/7 Operations
With time zone differences, an outsourced team can work around the clock, providing faster turnaround times and uninterrupted operations. This allows SMBs to compete not just with larger firms, but businesses on the other side of the planet, all without the hurdles that come with trying to hire talent in their local area.
Improved Efficiency and Reduced Overhead Costs
Outsourcing eliminates the need for in-house hiring, training, and infrastructure investments, driving efficiency and reducing overhead expenses.
Business process outsourcing offers key advantages while helping SMBs avoid major challenges. However, implementing a BPO strategy can be challenging. Below, we explore the major elements of creating and executing such an approach.
The “How” of Outsourcing Successfully
For businesses interested in reaping the benefits of offshore outsourcing, creating the right implementation strategy is critical.
Define Your Needs
- Identify specific tasks or processes to outsource.
- Specify required skill and experience levels.
- Set measurable performance metrics and quality standards.
Research Outsourcing Providers
- Seek reputable outsourcing companies with proven expertise in your industry. Not all potential partners support all business processes and not all those that do are reputable.
- Compare providers based on cost, service quality, and client testimonials. Reputation is one of the most important guidelines.
Conduct Due Diligence
- Assess the provider’s infrastructure, security measures, and ability to meet your requirements. Can they handle the volume you require? Do they comply with important rules and regulations that apply to your business, such as HIPAA?
- Verify their track record and understanding of your business needs. Client testimonials can be helpful here but do not underestimate the value of an initial round of interviews with potential providers.
Negotiate the Contract
- Clearly define deliverables, timelines, and KPIs. A firm agreement on and understanding of what your business is outsourcing, when deliverables are due, and the performance indicators you will use to measure success, is critical to your success.
- Establish service level agreements (SLAs) and agree on pricing and intellectual property rights. Make sure you get this information in writing so that you can refer to it later if necessary.
Onboarding and Training
- Collaborate with the provider to ensure seamless onboarding. This is a “getting to know each other” phase that helps set the tone for the rest of the relationship.
- Provide training and resources for knowledge transfer. Ideally, this will require minimal time and effort, particularly if the partner chosen has deep experience serving businesses similar to yours.
- Establish reliable, clearly defined communication protocols. Everyone involved should know whom to contact, when to contact them, why such communication might be necessary, and how to reach them.
Ongoing Management
- Regularly monitor team performance against KPIs. Never assume that BPO is something that you can “set and forget”. Successful BPO relationships require trust, but also active monitoring.
- Provide continuous feedback to maintain quality. Feedback helps your partner fine-tune their service offerings to match your needs better and ensures a mutually successful relationship.
- Promptly address challenges to sustain efficiency and alignment. Timely course corrections can make the difference between success and frustration.
With a better understanding of how to outsource business processes, it’s now time to turn our attention to the roles SMBs might choose to outsource.
The Roles to Outsource
Today, almost any role can be outsourced, from payroll processing to CIO positions. Below, we explore some of the most commonly outsourced roles for SMBs.
Accounting
From bookkeeping and payroll to financial analysis, outsourcing accounting functions ensures accuracy and compliance while reducing costs.
Back Office
Streamline administrative tasks such as data entry, document management, and reporting to enhance operational efficiency.
Customer Experience
Deliver exceptional customer support through outsourced teams skilled in handling inquiries, resolving issues, and improving satisfaction levels.
Healthcare
Tap into the Philippines’ healthcare expertise for roles like medical coding, billing, transcription, and patient support.
Startup Staffing
Access agile, cost-effective staffing solutions tailored to the needs of startups, including IT support, marketing, and operations.
Connext Global Solutions: Supporting Your Outsourcing Journey
Connext Global specializes in end-to-end outsourcing solutions, offering services such as recruiting, retention, management, employer of record, facilities management, and IT and development support. By partnering with Connext, businesses can seamlessly integrate outsourced teams into their operations, ensuring alignment with strategic goals and sustained success.
Important Considerations
- Communication: Establish transparent and effective communication channels to ensure clarity and collaboration.
- Cultural Differences: Understand and respect cultural nuances to foster trust and engagement.
- Data Security: Protect sensitive information through rigorous security measures.
- Quality Control: Set clear standards and monitoring mechanisms to maintain high-quality output.
- Vendor Management: Choose a reliable outsourcing partner and nurture a strong working relationship for long-term success.
Conclusion
Outsourcing to the Philippines through a trusted partner like Connext Global enables SMBs to leverage cost efficiencies, access world-class talent, and enhance their operational agility. By understanding the “why,” “how,” and the roles to outsource, businesses can unlock new opportunities, stay competitive, and achieve their growth objectives.
Start your outsourcing journey today with Connext Global.