Recent market reports indicate that the business process outsourcing market is growing rapidly and set to scale new heights in the coming years. The COVID-19 pandemic is driving organizations to outsource their non-core functions and focus on their core competencies to achieve higher growth. Organizations use outsourced solutions for two main areas of work: back-office tasks and front-office tasks. Non-core activities are considered the best for outsourcing and traditionally included payroll, data entry, data conversion, document scanning, data cleansing transaction processing, transcription services, call center services, and order and inventory management. Recent additions to the BPO suite include sales leadership and management, financial operations, information and data technology, market research, web design, human resources management and e-commerce front ends and fulfilment.
Over the years, reliance on BPO has continued to expand. Advanced technology and analytics are allowing BPO companies to deliver intelligent solutions with better insights and problem-solving for more complex issues. Let’s take a look at the main factors driving the growth of the BPO market today:
- Focus on improving business agility: All organizations are impacted by factors such as the state of the economy, changes in technology and the dynamics of a particular geographical region or market. They need to focus on improving business agility to survive the constantly changing business dynamics. Business agility is the ability to flourish and compete in the digital age. To stay competitive, organizations need to rapidly introduce new products and services to match consumer demand, reduce costs, measure performance data and market trends faster than ever before, and deliver exceptional customer service. BPO provides access to specialized services in various areas with greater accuracy and speed, helping organizations remain agile and adapt to the constantly changing needs and demands of today’s digital world.
- Improves efficiency while decreasing operating costs: A new Business Wire report notes that rising focus on reducing operational costs will be crucial in driving the growth of the global business process outsourcing market during 2020-2024.The decrease in logistical and geographical barriers has helped reduce the cost of outsourcing business processes (www.forbes.com). Organizations can achieve a significant decrease cost reduction of 30-40% by working with third-party offshore outsourcing providers. Business process outsourcing companies can perform various back office and front office tasks at lower costs. They can save the organization money by eliminating the physical overhead of maintaining staff, office space and equipment, as well as in other ways such as in tax savings. The most important benefit of outsourcing is that allows work to get done in a much more efficient way. BPO improves an organization’s efficiency in many ways:
- Allows organizations to focus on their core business activities
- Streamlines business operations and helps in the creation of more productive and efficient internal processes
- Document scanning and data entry services help build well-organized document management systems for quick and easy access to information, which speeds up business processes
- Outsourcing frees up valuable resources for other core activities
- Focus on core competencies: Outsourcing is a smart way to improve focus on core competencies or most important functions of a business. As organizations experience rapid growth, their back-end and front-end operations expand and require higher investment. Outsourcing frees up their resources so that they can be diverted to core competencies like customer relations and product leadership. By outsourcing non-core and administrative functions, organizations can focus their time and resources on developing their core competencies like customer relations and product improvement, and improve their competitive advantage. In the healthcare sector, outsourcing non-core functions such as revenue cycle management, claims management, and patient engagement, among other functions, to third parties, allows healthcare organizations to focus on their core competencies and improve patient outcomes.
- Access to advanced technology and skilled resources: BPO provides client businesses with access to innovative technological resources that they might not otherwise have. Businesses must be faster to market with products based on new technologies, respond to customer needs quicker, anticipate competitors, and be quicker to upgrade and modify products after initial release. BPO supports these goals. BPO companies constantly strive to improve their processes by adopting the best technologies, enabling their clients to reap the advantages and stay competitive. With the availability of skilled manpower in the BPO company, organizations can save on recruiting, training and certification, onboarding, and terminations. They can also enjoy the services of business process consultants and industry specialists at lower costs.
- BPaaS cloud-based services: Reports say that cloud computing has revolutionized BPO. Gartner defines business process as a service (BPaaS) as the delivery of business process outsourcing (BPO) services that are sourced from the cloud and constructed for multitenancy. BPaaS services providers provide IT platforms and solutions to suit the needs of the client system as well as complete support to help them manage their entire back-office operations. BPaaS provides ready access to the trained manpower clients need to perform the necessary operations. Cloud-based data makes outsourced solutions accessible from anywhere in the globe.
- Allows for diversification: Another reason for the growing popularity of BPO is that it allows businesses to meet their diversification objectives and mitigate risk. By providing access to new technology and skills, BPO allows organizations to develop new products or services that are complementary to their core business and appeal to their customers.
According to Grandview Research, the global BPO market size which was valued at USD 232.32 billion in 2020 is expected to record a compound annual growth rate (CAGR) of 8.5% from 2021 to 2028. Businesses of all sizes are benefiting from outsourcing. There are many business process outsourcing companies out there and choosing the right partner is necessary to experience the benefits of this strategy.
