Key Steps to Minimising the Risks of Outsourcing Business Processes

Key Steps to Minimising the Risks of Outsourcing Business Processes

There is no doubt that business process outsourcing (BPO) offers potentially significant benefits, including healthy cost savings, improved efficiencies, access to expertise and resources, and the ability to shift resources from non-core business tasks to revenue- and growth-producing activities.

That said, any staffing or resource management decision introduces risk. The success or failure of your organisation’s BPO initiative comes down to selecting a visionary partner that can help you not just identify possible BPO challenges, but mitigate their potential impact as well.

The Benefits of Outsourcing Business Processes

An increasing number of organisations worldwide recognise the benefits of business process outsourcing, which include:

  •    Cost savings that result from shifting the performance of non-core and back office tasks to a third-party provider.
  •    The ability to leverage expertise and resources that may be cost-prohibitive to maintain in-house.
  •    Access to around-the-clock service, thanks to the time differences associated with overseas outsourcing.
  •    The ability to free employees from repetitive work so that they can concentrate on revenue-generating core business activities.

The Risks of Outsourcing Business Processes

While the potential benefits of BPO are substantial, two things must happen for outsourcing to deliver a cost-benefit to a business: the service provider must perform the outsourced tasks to a mutually agreed-upon standard, and they must continue to do so at a mutually agreed-upon rate.

If the costs associated with outsourcing do not remain consistent, any initial savings can quickly be eliminated. Quality must be consistent as well. In an age where customers are demanding better customer service all the time, outsourcing customer-facing operations such as call centre to an overseas service provider can damage an organisation’s brand if the service provided is not up to par. If a brand’s reputation takes a hit as a result of improper outsourcing, sales can suffer, contributing to the indirect cost of lost revenue.

Inconsistent quality can result from outsourcing tasks or services to areas where standards may be lower, where regulations may be less strict, or where language barriers can cause important information to be lost in translation. Cultural barriers may present an issue as well. If cultural standards see being wrong as a bad thing, team members may ignore problems that arise or fail to proactively solve them on behalf of your organisation.

Another risk associated with outsourcing is data security. With security breaches occurring more frequently, loss or theft of customer data is - or should be - a very real concern for businesses, particularly with compliance laws and penalties becoming tougher by the day.

Finally, successfully adopting business process outsourcing requires contingency planning. If your chosen provider becomes unavailable for any length of time due to natural disasters, business failure, or some other unplanned event, you risk not having the resources in place to perform key processes. This could substantially affect your ability to do business.  

Minimising the Risks Associated with BPO

As you may have noticed, the risks described above are, in large part, risks associated with your chosen service provider - not risks associated with BPO itself.

Understandably, bringing on a third-party to handle business functions (even if they are not considered ‘sensitive’ or ‘mission-critical’) introduces risks that are not present when you handle the same processes in-house. For these reasons, organisations considering BPO are wise to focus most of their risk mitigation efforts on the provider selection process.

Thoroughly vet potential BPO partners the same way you would vet any new supplier, partner, or employee of your company. Meticulously check their credentials, experience, and background, and seek out bona fide, checkable references from former customers who have employed them to provide similar services (and who are happy with the results).

A good BPO provider will have:

  •    A proactive attitude that is not just dictated by contractual obligations.
  •    Processes in place that not only maintain quality but address potential quality inconsistencies that may arise over time.
  •    A plan in place to ensure consistent performance in the face of unexpected events.
  •    Business continuity and disaster recovery plans to guarantee operational performance and financial solvency.
  •    Adherence to industry-class security and privacy practices that ensure the data entrusted to them is as protected as it can possibly be.
  •    Sufficient size, financial resources, and backing to be able to scale with you as your organisation’s needs change and grow.
  •    Significant experience, as well as a strong knowledge of best-in-class BPO tools and systems.
  •    ISO Certifications and governance over 27001 and 9001.
  •    A proven track record of working with similar businesses, in similar industries, on similar problems as the ones you are working to solve.

Once you have found a provider with the qualities and credentials you are seeking, risk can be minimised further through the use of binding contracts and agreements. These might include:

  •    Service level agreements (SLAs) and defined scopes of work (SOWs) that clarify your mutual expectations regarding quality control and data integrity standards.
  •    A governance plan agreeing to regular audits and ongoing monitoring to ensure consistent quality is maintained.
  •    A commitment to ongoing compliance to relevant industry standards, such as ISO 27001 and 9001.
  •    A confidentiality agreement that offers legal protection against data theft or loss.
  •    Mutually agreed-upon key performance indicators (KPIs) that can be tracked and monitored over time.

Outsourcing your business processes does not have to mean compromising quality, reliability, or security. Converga has 25 years experience in the field as a trusted service provider with customer satisfaction scores of 97%. The right BPO and managed services provider makes it possible to enjoy all three. Reach out to Converga today to see how.

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