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While there are many benefits associated with business process outsourcing, it is important to remain fully cognizant of the challenges associated with the process before pursuing a BPO implementation.

Estimating outsourcing costs

Manpower is certainly a considerable expense associated with particular aspects of BPO, such as managed services, and it is where companies will spend the bulk of their money. However, digital services such as electronic invoicing, remove the factor of human costs which would previously have been required for those processes to occur. Having robust documentation in place that maps out existing processes, recruitment, training and onboarding can minimise wasted spend associated with labor.

Transition and project management costs are another major factor. For the business benefits of BPO to be fully realised, the transition to an outsourced model must be as efficient as possible. The BPO partner chosen has a substantial impact on how efficiently the transition can be carried out.

With these elements taken into consideration, there are several factors that will ultimately influence total costs, including:

• Exchange rate fluctuations:
Prices can fluctuate considerably with a BPO partner located outside of the home country.

• Training duration and costs:
It may take longer to train someone overseas who is not already familiar with a company’s market or customers.

• Turnover:
Employees at large outsourcing companies may explore job offers with different companies. This turnover can produce delays while replacements are trained.

• Hidden costs:
Language barriers can add time spent on communication that would not be incurred when hiring in a company’s local area.

• Communication and productivity:
A BPO partner should hold relevant International Organisation for Standardisation (ISO) standards and certifications, and they should have experience in your industry or vertical. Service level agreements (SLAs) are also critical during an initial consultation and onboarding to reduce risk.

Will BPO negatively affect my business or my employees?

Without proper planning and management, business process outsourcing could be more of a detriment than an advantage; for example, if you experience major communication challenges when offshoring to another country with a different culture, in a different time zone.

If customer call reps lack language fluency, their inexperience could hurt the customer service experience. If a vendor’s employees are constantly coming and going with new ones needing to be trained, your business may suffer. Or if your level of control drastically declines with business process outsourcing, you may not be able to ensure the same level of quality moving forward, which can damage your brand reputation in the long run.

It is vital that there is due diligence and research done before choosing a vendor to ensure quality delivery and avoid these challenges. It is paramount to success that correct scoping is done to ensure the proper systems for management are in place to make BPO a success.

Business process outsourcing: use cases

“Business process outsourcing” is a broad term; several smaller, more defined services and use cases exist under its umbrella. As you start to explore the benefits of BPO for your business, you may want to familiarise yourself with the following use cases.

Managed services

One area of outsourcing companies may come across is managed services, which can facilitate smooth day-to-day operations for your company, in addition to allowing you to leverage the skill sets of highly experienced professionals.

Tasks that fall into the category of managed services are subset of BPO and include four main areas of responsibility:

• Corporate services:
Handling mailroom and courier services,

• Supply chain management:
Optimising supply and distribution channels, finding purchasing alternatives, and monitoring daily performance.

• Executive hospitality:
Enhancing customer service, and offering receptionist services.

• Records management:
Identifying legal requirements for storing and retaining records, scanning and distributing records, and destroying outdated records at the appropriate time.

• Human resources:
Overseeing recruitment and talent development, conducting performance reviews, and managing activity-based workplace programs.

As an example of the kind of operation that could benefit from managed services BPO, take Australia’s Department of Health. In total, the agency:

Receives more than 1.1 million incoming mail pieces and sends out over 800,000 outgoing mail pieces each year.
Creates more than 80,000 files, transfers another 200,000 files, sentences 10,000 files and manages 90,000 additional TRIM actions in a year.
Has more than 5,500 staff members working across 150 service points spanning 11 buildings.

Given the high volume of transactions sustained by the agency, business process outsourcing services can be utilised to:

Centralise mailroom staff and functions in order to reduce the required usage of courier services, as well as the costs associated with them.
Develop sorting protocols and colour-coding to improve the efficiency of remaining mail runs.
Implement records management best practices to reduce human involvement in file transfers and sentencing.
Improve contract management and venue management practices to reduce redundant staffing and order placement.

Further, as the impact of each of these and other activities can be monitored and benchmarked, enabling the Department of Health and its BPO partner to provide maximum efficiency gains over time.

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Offshore managed services (OMS)

As the name implies, offshore managed services involve outsourcing business tasks to an offshore provider in another country with a favorable exchange rate. As an example, Australian businesses commonly partner with OMS partners that tap into talent in the Philippines, which boasts a workforce for Canon Business Services that is 98% tertiary qualified (dramatically better than the market average of 30%).

Businesses processes that may be handled through offshore managed services include:

Administrative services
Finances and accounting
Complex claims handling
IT support and help desk
Application development and IT engineers
Human resources
Graphic design

Potential benefits of engaging offshore managed services through a trusted provider - beyond the cost-savings that come from outsourcing to countries where labour costs are cheaper - include:

The ability to tap into a deep pool of talent resources. In many countries where offshoring operations are common - such as the Philippines - BPO roles represent solid career opportunities for local workers + who are highly educated / tertiary qualified
The productivity benefits associated with freeing your staff from repetitive daily tasks so that they can focus more on core business activities. Not only will this improve productivity, it also leads to higher job satisfaction and retention rates.
The risk management benefits that come from working with an established provider. Not only can these offshore service providers take on the risk of your non-core functions, they also eliminate the risks associated with setting up your own operations in a foreign country.
The flexibility that comes from having a workforce in another time zone that is able to work around-the-clock on your business functions.
Scale up your operations, via building an extension of your team.

It is also important to note the difference between offshoring and offshore managed services. Whereas offshoring requires setting up a new operation overseas, offshore managed services tap into the services of an established and reputable OMS provider.

Certainly, there are pros and cons to each approach. But while setting up your own offshore operation offers greater levels of control, the costs and risk associated with this process should not be minimised. Finding an appropriate location, developing the necessary infrastructure, and providing local management require significant investment that may far outweigh the efficiencies that can be leveraged with an existing OMS provider.

A good example of an enterprise that has succeeded with offshore managed services is Canon Australia.

In order to improve business efficiency and lower their overall costs, this leading imaging organisation worked with an OMS partner to update their process documentation using a team based in Manila.

Ultimately, as a result of these efforts, Canon Australia was able to transition its finance and accounting, accounts payable, analytics and contracts administration functionalities to the Philippines, resulting in further increased efficiency and lower costs.

Document services

Modern business practices make it possible for businesses of all sizes to reduce their paper and document management requirements through BPO engagements.

Document processing

Business process outsourcing can assist in the management of form automation, claims processing, high-volume scanning, print management, and application processing. Document processes form the foundation of a businesses digital transformation, allowing the capture, storage, retrieval and analysis of data previously locked in disparate locations in many different physical formats. For example Back Scanning is a service customers can use to rapidly transform many types of physical documents into usable digital files leveraging scanning technology of BPO and existing systems, processes and people.

Consider the example of Kiwibank, a provider of low fee, low interest rate credit cards in New Zealand. In order to free up internal capacity to focus on aggressively scaling the business, Kiwibank worked with a BPO partner to implement an online application processing solution.

This solution involved routing all branch or direct mail generated applications to a single address, opening each application, completing the “for office use” section, and preparing and out-sorting the application. In addition, OCR technology was implemented to determine the type of form being submitted, the data elements available for capture, the business rules to apply to the data, and the format of data to be loaded into core banking systems.

Not only did doing so reduce the traditional cycle times associated with Kiwibank’s former application processing process, it further improved employee satisfaction by freeing up time to be invested into other responsibilities.

Digital mailroom

Handling a large volume of mail represents a key business process outsourcing opportunity. Companies need secure online storage of digital mail and efficient ways of managing paper mail; digital mailroom can be an ideal solution.

With digital mailroom, a BPO provider can receive and scan paper mail, and then convert it into digital formats, greatly lowering the costs associated with handling large volumes of paper. All mail — both digital and scanned — can be entered into a workflow system and re-routed to the appropriate individuals within a company for easy access.

Take, as an example, Australia’s Department of Health. With over 5,500 staff working all over the country, managing their volume of mail was a herculean task. Using a BPO provider and shifting to a cost-effective Electronic Document and Records Management (EDM) solution made it possible for the department to improve document processing and manage work governance to better support digital records and information management.

As a result, the team was able to manage the deletion of former staff accounts, data cleansing, and bulk updates to file, dramatically reducing their physical storage costs and overall management costs, while also increasing the speed of record retrieval.

Information management

Document and data management have become increasingly important in society with growing concerns around digital security. Quality information management consists of secure scanning, indexing, and a comprehensive system for archiving and retrieving documents. This practice allows for these normally internal processes to be outsourced, providing an opportunity to save money and time.

Not only can a BPO partner work with you to develop a secure storage system that allows you to store documents in multiple, searchable formats, their solutions also minimise time spent accessing documents in order to resolve customer issues while also reducing possible postage and printing costs.

Workflow and exception management

A document workflow is a system that allows businesses or individuals to create, monitor, alter and organise documents that are necessary for business operations. Many businesses often have a variety of different documents for various time periods, making it easy to lose track of important and detailed documents. Workflow management is designed to automate, store, search and route documents which streamlines business processes.

For example, InFLOW is Canon Business Services' queue based document workflow engine that is used to track, monitor, route and report the progress of documents as they move through predefined business processes. InFLOW manages documents while they are essentially “active” and require processing by either human intervention or automation depending on the status of the documents.

Thanks to their access to best-in-class technology, BPO partners can take on the management of your organisation’s first-level exceptions. Classifying and managing your exceptions using BPO workflows and technology also reduces the time required to correct errors and minimises the in-house investment needed to route issues for resolution.

An example of a business that would use a workflow process such as this would be a large-scale retail company such as JB HiFi – with many different store locations requesting stock allocations, a workflow management system can ensure that when an order is submitted, the automated system tracks the order through the submission, approval, action, and distributed process. The exception management then becomes valuable by setting parameters that allow you to ‘manage by exception’, which in the case of JB HiFi might mean that if an order does not meet the minimum requirement set for delivery, or the requested items do not align with the anticipated stock levels required for that location, it is then flagged with a designated person to review the issue. This process thus alleviates JB HiFi from having to manually review every order that is submitted, and still remain confident that the set parameters for orders will be met.

Financial services

Transitioning the management of financial services to a BPO partner represents a massive efficiency driver for many organisations.

For instance, business process outsourcing can be used to support:

Accounts receivable
Accounts payable
Invoice management (including electronic invoicing)
Purchasing processes from order to payment through ‘Procure 2 Pay’ solutions

For example, by creating an automated accounts payable solution, businesses can combine digitizing, processing and routing the necessary documents through a predefined business workflow. Business Process Outsourcing technology can provide streamlined options to increase the efficiency of business operations while also yielding financial benefits. For example, a digital portal can present invoice information and data, allowing staff members to access a digital system that is designed to conduct invoice functions such as running reports, adjusting workflow rules and coding of invoices.

BPOs utilise a combination of technology which allows them to deliver 98.5% data accuracy within 24 hours of receipt.

Take the example of The Compass Group, the world’s largest food service and hospitality organisation. In order to reduce the costs associated with the Accounts Payable function, support faster payment cycles, and support the suppliers’ own transition to electronic invoicing, The Compass Group implemented a ‘Procure 2 Pay’ solution which reduced AP costs by 30% and improved overall supplier relations.

Robotics process automation (RPA)

Robotics and AI are playing a bigger and bigger role in modern business operations. According to a recent report from Adobe and Econsultancy, 15% of companies were using AI in 2018, but an additional 31% were planning on using it within the next year.

According to UiPath, “Robotics process automation is the technology that allows anyone today to configure computer software, or ‘a robot’ to mimic the actions of a human interacting within digital systems to execute a business process.”

Robotics process automation is an effective way to integrate with existing systems to automate any manual workflow and can be used in:

Day to day

Creating and delivering invoices
Data reconciliation
Quote to cash
Data migration and entry
Data validation
Periodic report preparation and dissemination.

Finance

Financial planning
Bank statement reconciliation
Daily P&L preparation
Loan application processing
Claims processing
Appeals processing
Customer account creation and onboarding
Trade execution
Auditing
Compliance and fraud detection.

Any industry

Procurement:

Invoice processing
Requisition-to-purchase order

Human Resources:

Payroll
Hiring
Candidate management

Contact Centre:

Customer service desk

Healthcare:

Reports automation
System reconciliation

Manufacturing:

Bills of material (BOM) generation

Hi-tech & Telecom:

Service order management
Quality reporting

Energy & Utilities:

Account setup
Meter-reading validation

Besides these examples, robotics process automation can also be used to create effective workflows, such as in and out trays. This goes beyond simply plugging into existing processes, allowing users to actually create new workflows that improve operations.

There are three main ways robotics process automation can improve your operations.

First, it dramatically cuts down on errors, offering a level of accuracy that is nearly impossible to achieve with human workers. Software robots can operate 24/7. They do not get fatigued or make mistakes. They simply follow a set of rules, ensuring a consistently high level of accuracy.
Second, RPA increases speed. Software robots can perform programmed tasks much more quickly than human workers, helping companies to streamline workflows and accomplish more in less time.
Finally, it improves compliance. Once trained, robotics process automation functions in line with industry laws and regulations, thereby reducing a company’s risk and potential legal exposure.
Integrate with legacy systems, no need for IT integration, RPA seamlessly integrates with CRM, ERP, Finance, email etc.

An example of RPA in action can be seen in customer order processing. Imagine an ecommerce seller managing hundreds of orders each day. With RPA:

Whenever orders are placed online, they can be handed over to a robot that completes the data entry and ensures proper order placement.
This occurs without the need for human inputs. Because robots can be programmed to follow a set of commands, many of the errors that come from manual processing can be avoided.
The robot can also be programmed to identify red flags indicating potential issues with orders so that only those that truly need human input will be escalated, minimising associated human capital costs.

Note that, in these cases, the robot essentially acts like another member of your team and functions as another user; a robot could even report to an employee in your enterprise’s org chart. Robotics process automation works with a company’s people and processes just as any human would — the only difference is that a robot can complete tasks several times faster.

And while it is true that not all businesses are ready for robotics process outsourcing, a consultation with an expert in the industry can highlight key changes your company can begin making now to facilitate a smooth transition.

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