Business Process Outsourcing has proven to be a great strategy for businesses looking to streamline their processes and focus on their core competencies. However, BPO is not without its risks. Many business leaders and entrepreneurs have made avoidable mistakes, while others opt for BPO services without proper planning.
To avoid common business process outsourcing pitfalls, it is critical to understand what it entails as well as all the dos and don’ts of the practice.
In this article, we will discuss the most common threats to a successful business process outsourcing endeavour and how you can avoid these pitfalls.
Pitfalls to Avoid When Considering Business Process Outsourcing
To ensure a successful BPO endeavour, these are the most common mistakes you should take note of and avoid;
1. Not setting clear goals and expectation
The first mistake many organisations make when considering business process outsourcing is not establishing clear goals. Without setting clear objectives, you run the risk of having a disconnect with your outsourcing partner and, ultimately, unmet expectations. Before any outsourcing endeavour, it is important to focus on your business goals, know the business requirements and decide what to outsource. You must provide clear answers to these questions;
- What do you aim to achieve by outsourcing specific functions?
- What is your budget?
- What level of expertise do you require?
Understanding the drivers behind your decision to outsource a specific business process is critical to a successful venture. In addition, it is essential to set clear benchmarks to measure success and a specific timeline for achieving those benchmarks.
2. Unclear Service Level Agreement (SLA)
If you’re looking to outsource some of your business processes, a service level agreement or SLA assists you and your service provider in clarifying responsibilities, managing expectations and establishing the basis of a win-win relationship. An unclear service level agreement hinders a successful business process outsourcing endeavour.
One way to avoid this pitfall is to have a clear and detailed service level agreement before outsourcing your business processes. In addition, you may opt for an experienced legal team to verify your business agreements.
At Workforce Group, we lay the groundwork for mutual understanding through a well-defined service level agreement that details the level of service expected of us as your business processing outsourcing partner. We ensure all agreements are rightly done to avoid litigation or client mistrust.
3. Inadequate Experience with Outsourcing Vendors
If you’ve never worked with an outsourcing vendor or partner, you risk things getting out of hand or falling for whichever information is presented to you. Ultimately, you may find yourself misusing resources unnecessarily or operating in a vacuum.
To avoid this pitfall, especially if you lack experience, you should only rely on reputable business process outsourcing service providers. Ensure to research and partner only with an industry-recognised service provider. You should also keep constant communication and analyse work processes regularly.
4. Poor Communication with the Internal Team and BPO Service Provider
Poor communication is one of the most common challenges many organisations face when outsourcing. Cultural differences and language barriers can often hinder effective communication, leading to unmet expectations, misunderstandings and delays.
To avoid this pitfall, you must establish clear communication protocols and guidelines with your BPO partner, such as clear project expectations and regular check-ins to discuss progress. You also need to ensure robust communication through channels such as;
- Virtual calls
- Feedback loops, etc.
Similarly, you must ensure your team members are in sync with what you’re working towards and often communicate so that everything runs smoothly! Doing this will help improve relationships with your business process outsourcing partner.
5. Partnering with the Wrong BPO Service Provider
Partnering with a BPO service provider who does not align with your business goals or have your interests at heart will likely result in significant difficulties.
To mitigate this risk, there are certain factors you must consider to help you choose the right BPO provider;
- Industry Expertise: Not all BPO providers will understand your unique needs and business goals. As such, you must hire a reputable service provider like Workforce Group that understands your business and expectations and is highly regarded in the industry.
- Experience and track record: Your preferred BPO provider must have a distinguished portfolio of demonstrated work and results and positive client testimonials.
- Adherence to quality standards: Demonstrating adherence to standards is non-negotiable and a great way to ensure your BPO partner will improve and support your organisation with quality results.
6. Data Security Concerns
Data security is a significant concern in today’s digital age, and there may be a risk of revealing confidential information (data breach) or non-compliance with data protection regulations when working with an external service provider.
To avoid this pitfall, your outsourcing vendor should be able to provide you with a security plan detailing how they intend to protect your company’s data. You also need to ensure that this plan aligns with your internal policies and those of your industry and government regulations.
You can also avoid this pitfall by working with reputable business outsourcing service providers like Workforce Group and creating non-disclosure agreements to protect sensitive information from being leaked.
In addition, you must run background checks on your outsourcing partner before reaching out to them. Since not all of them will have strong cybersecurity measures, it is best to assess your options and choose the safest one.
7. Over-dependence on Service Providers
Avoiding business process outsourcing pitfalls is much easier if you maintain an active role in the process. Relying totally on external service providers can create a dependency that may limit your flexibility to adapt quickly to internal strategy shifts or market changes.
At the same time, it’s important to understand that outsourcing will not solve all your business problems, but it can make life much easier. Overdependence on your service provider can lead to higher costs and risks.
To avoid this, it is advisable to outsource only non-core business processes while maintaining control of day-to-day operations in-house to remain agile.
8. Hidden Costs
It is usually an ordeal for business managers when unforeseen costs arise in an ongoing business process outsourcing project. This can be especially problematic as your outsourcing endeavour becomes more expensive and, as a result, no longer feasible or leads up until long-term contracts become unworkable. Such hidden costs may include expenses related to managing contracts, transitioning services or unforeseen operational costs.
To avoid this, you must thoroughly review your outsourcing contract for any hidden costs. Ensure the contract is clear about what will happen if it occurs. You may also conduct a cost-benefit analysis to understand the full financial implications of your business process outsourcing project.
9. Cultural Differences
Cultural differences can significantly impact how a team works. The cultural differences between your team and that of your outsourcing service provider may lead to misunderstandings and communication concerns. Ultimately, this may turn a well-conceived and cost-saving strategy into a major problem.
When evaluating prospective business process outsourcing providers, you must consider cultural differences, especially if your employees are involved. You must also ensure communication channels between both parties run clear to avoid conflicts or misunderstandings.
10. Changing BPO Provider
A failed BPO project can result in serious consequences for your organisation. However, when changing BPO service providers, ensure that subsequent contracts contain exit clauses to avoid damages if things go wrong.
Another consideration to make is the issue of intellectual property rights. You must provide answers to questions such as;
- What happens with your data when you need to change providers in an emergency?
- Are they able to do so without loggerheads or disagreements?
Providing clear answers to these questions can prevent problems when changing providers.
While your business process outsourcing project has several benefits, partnering with a business process outsourcing vendor is essential for a successful venture. A reputable and reliable partner like Workforce Group can help you avoid these pitfalls.
Over the past 19 years, we have helped clients across several industries avoid BPO pitfalls with our expertise, commitment to quality control and efficient process. We can help you too.