Consider a small business owner who needs a strong web presence to be successful in his business. The example of such a business could be an e-commerce operation, a real-estate agency or investment firm marketing its properties or opportunities online, a graphic design company, or any other operation that needs to attract users over the web to stay in business. The owner is constantly worried about how to present a refined and smoothly running website to its potential customers and how to utilize the varied online marketing strategies to stay relevant in the ever changing virtual marketplace.

While he is grappling with these issues, he or she still needs to address his back-office tasks such as bookkeeping, invoicing, and other tedious activities that take his valuable time away from client facing activities. In most likelihood the small business owner can not afford to have dedicated full-time staff to address his front-office and back-office needs so he has to rely on outside vendors – whether local or off-shored. Complicating the arrangement is that he or she has to rely on more than one vendor to get all the tasks done. Availability of vendors that could take care of most of his business tasks was non-existent. This added burden to his time since he had to communicate with all the vendors and in some cases pass information back and forth between these different vendors so they could do their job.This added burden of communicating with multiple vendors and in some cases passing information between vendors can become very taxing.

Single Sourcing – Integrated Support

Now imagine an arrangement in which one company can provide integrated front and back-office services to this small business owner. The provider has spent years working with different customers and developing expertise in different areas that the owner needs help with. More importantly, the provider has also built up experience and knowledge base of how to leverage this expertise in different areas such as online marketing (SEO, SMM, PPC etc.), book-keeping, application development, and market research to build integrated well-functioning teams that seamlessly handle different aspects of the business. Now the owner does not have to explain the business to a number of different vendors. He or she does not have to pass information constantly between these vendors for them to do their job. Once he has developed a comfort level with his team at a single vendor, he can really focus on taking the company to the next level.

Proactive Support vs Reactive Task Performing

The benefits of using integrated back and front-office services do not stop at just the operational level. Over the course of our interaction with our customers who use these packaged services, we have found that by having a complete picture of their businesses, we are in a strong position to offer them strategic advice on how to achieve future vision of their business. An example is a provider working with the customer to understand their desired growth rate and then devising online marketing strategies to deliver on those growth plans. These grown plans might also trigger other changes to the business operation such as implementing integrated Customer Relationship Management (CRM) or Content Management System with the website, requiring new market research on the products that the customer wants to launch, or bringing a new person to handle the increased invoicing and payments to the suppliers. The team can easily adjust the headcount and the required skill mix to successfully execute the required strategies. In a situation in which the small business owner was dealing with multiple vendors, the execution of this strategy would have wasted valuable time in coordinating activities between them and, more importantly, increased the odds of failure by adding more complexity to the execution plan.

Provider Selection – Critical

The successful vendor selection for this type of outsourcing obviously becomes very critical. If a single vendor is going to be providing most of the required services, then the owner must have faith in vendor’s ability and stability. First of all, the remote assistance companies come in all shapes and forms. Many of them provide different siloed services but the customer has to probe them to see if they have been successfully serving customers that have entrusted them with more than one type of service. Ask for references and inquire about the setup of some of the teams that the vendor has currently put together for its other clients. Also start out slow. Many of our customers started with one service and as they became aware of our other offerings and felt comfortable with our cost and quality, they expanded into other areas and some to the point where we manage almost all critical aspects of their business – both operationally and strategically. The success in managing teams of this nature comes from experience and that has to be the differentiating factor of the selected vendor.

Bottom-line

For us in the industry, the ability to offer these integrated services is truly a big step in the evolution of the remote assistance industry. The industry has moved beyond offering just Business Process or Knowledge Process services to offering “Integrated Process Outsourcing” services where the a provider looks at the front and back-office processes of their customers and offer customized integrated services to suit their particular requirements. Some of these offerings might fall under the traditional definition of BPO and some might under KPO, but, for the customers the distinction is really not that important. What they really want is an arrangement in which they can get not only revenue enhancing but also cost reducing services from a single provider.

The accounts payable function is a critical operation in an organization as it ensures the smooth flow of products and services by suppliers by ensuring they are paid in a timely fashion. Due to the complex and vast supply chains that are the norm these days, any slight disruption caused by payment delays or inaccuracies can bring the business operations of an organization to a grinding halt. As a result, there is usually a dedicated staff that handles the invoicing and vendor payments. The staff ensures that the invoices submitted by suppliers are accurate, conform to purchase orders and corporate purchasing guidelines, and meet any required government regulations.

The work load of the team that oversees the accounts payables is skewered towards month-end financial closings and lot of their times is spent on getting the invoices corrected and completed before the closing. As a result it is quite common to see the team putting in long hours before the month-end closings to get things in order.

Due to this cyclical, and at times, tedious nature of the work, more and more companies, big and small, have started looking to outsource entire or portion of this work to outside vendors. Normally this involves companies working with trusted partners who do most of the work of ensuring the accuracy of the invoices and payments, and resolving any related issues. Generally service provides get paid either on per-hour basis or per-invoice basis that they process. This greatly reduces the need for organizations to have full-time staff just to meet the month-end load and can therefore deliver meaningful cost savings.

Just like any other outsourcing initiative, transferring of accounts payable work to an external provider takes careful planning. This is a significant business process change in the client organization so therefore has to be properly communicated by the senior management and bought-in by all the effected people. Since the work that is getting transferred involves financial data, the client has to make sure that internal processes are very well documented and the provider is thoroughly trained and well-versed with those processes and guidelines.

The transfer of accounts payable function itself is not very complicated. With advance imaging technologies widely available these days and faster internet connections, both paper and digital invoices can be transmitted efficiently through secure networks. The provider employs stringent security policies to safeguard the data, process the invoices and payments, and field any questions or concerns that the vendors may have. In the end, the provider submits all the relevant data to the client organization which incorporates that into their financial reports before the closing period.

Once the process has been setup and is smoothly functioning, the long term cost savings are substantial and worthwhile.

With the outlook of global economy still uncertain, companies are looking towards smaller and lower risk outsourcing transactions for achieving their cost saving targets. This approach makes sense because if the larger deals go wrong, the cost for companies to roll back their investments are proportionately higher. Even when the companies are awarding smaller contracts, their expectations for quality and commitment from their providers have not wavered. On the contrary, companies expect outsourcing partners to step up their execution and show their commitment by continuously providing high quality services at a reasonable cost.

For providers, this implies that they need to step up their game. They need to put much more focus on understanding clients’ businesses, their processes, and their objectives that they want to achieve with the collaboration. This will minimize the operational, strategic, and capability risk. Secondly, the providers need to improve their delivery process. They need to incorporate the necessary technology and tools in their delivery process to make it more efficient and less error prone.

While the recession has slowed and somewhat changed the BPO dynamics, the fact remains that this segment of technology services will continue to grow. According to Baystreet.ca, the global “addressable” BPO market is worth $122-154 billion U.S., most of it in retail banking, insurance, and travel/hospitality industries, with such sectors as the auto, telecoms, pharmaceutical, accounting and Human Resources catching up.

Let’s review some of most common business process outsourcing sectors:

Accounting Outsourcing

Accounting Outsourcing is gaining popularity with SMEs because it is becoming a challenge for them to keep their books up-to-date at a reasonable cost. Accounting outsourcing services not only reduce the annual cost by 50% to 60% but also eliminate the need to maintain a separate accounting department.

Some of the services under this category include:

• Account Receivable and Payable
• General Ledger
• Fixed Assets/Equipment Accounting
• Audits and Project
• Closure of Books
• General Accounting Reporting
• Accounts Reconciliation
• Cash flow Analysis
• Sales Analysis
• Billing Services

Data Process Outsourcing

Data, once collected and properly organized, can be a powerful tool for decision makers. It can provide valuable insight and help companies formulate their future policies and growth strategies. With data process outsourcing, companies can access highly qualified resources at reasonable rates.

Some of the services in Data Process Outsourcing include:

• Data conversion from multiple platforms to single platform
• Conversion of raw data to desired format
• Data compilation from different sources
• E-book conversion
• Catalogue data entry
• Receipt and bills data entry
• Editing, sorting and indexing data

Customer Services Outsourcing

Prompt, courteous, and knowledgeable customer service is essential for survival of any business. Customers, who are not satisfied with how their complaints or questions have been handled by a certain company, are ripe targets for competitors. However, companies are always struggling to find enough financial resources to continue to invest in their core business and at the same time to hire, train, and deploy more customer service personnel. Customer Service Outsourcing is a viable option which companies can use to bulk up their customer care staff while keeping the costs low.

Some of the services provided include:

• Call centers
• Voice emails
• Email/chat support

Transcription Outsourcing

One aspect of technology advancement has been the advent of paperless office. One of the processes supporting the model is transcription from audio files. Transcription outsourcing has reduced cost and turnaround time, and at the same time freed office resources from taking tedious.

Some of the services included in Transcription Outsourcing are:

• Medical transcription
• Audio book conversion
• Meeting agendas and notes
• To do lists

Knowledge Process Outsourcing (KPO)

This part of BPO involves outsourcing of more complex business tasks and processes. While in other areas of BPO, the workers are executing a defined business process which is repetitive in nature; in KPO the workers are using their knowledge of certain area to generate valuable insight and intellectual property. For example, an analyst in an offshore location, who has an MBA and some stock market exposure, can perform stock analysis and write a report, is providing services that fall under Knowledge Process Outsourcing.

Increasing education levels in offshore locations have opened vast KPO opportunities for companies looking for skilled and knowledgeable staff at reasonable cost.

Some of the services that fall under Knowledge Process Outsourcing are:

• Learning Solutions
• Business & Market Research
• Research & Development
• Content Development
• Data Analytics
• Training & Consultancy
• Equity Research

Conclusion

BPO provides a viable and profitable business model for both buyers and providers of these services. The cost savings are well documented and understood. As long as the involved players continue to adjust to ever changing economic conditions and technology innovations, there is strong reason to believe that BPO services will continue to gain traction and, therefore, should be a part of the overall corporate strategy of companies wanting to increase productivity and to reduce cost.