Thought Leadership

Is BPO Cost-Effective?

Many companies turn to business process outsourcing in the hopes of saving cash, but is BPO cost-effective overall?

In short, yes, it can totally transform a company’s revenue and free up working capital, but how much your company stands to save depends on a number of factors.

What services do you plan to outsource?

The more efficient your processes become, the more your company stands to gain, but all services don’t produce the same level of ROI. A few areas to consider include:

What have you done to increase efficiency already?

Many companies, especially those focused on BPO cost, attempt to eliminate inefficient processes and errors on their own before turning to outsource. For example, an organization may be leveraging a call center with 150 people and get it down to 125 without outside help, while an outsourcing company may whittle it down to 100. That’s still a significant saving, but obviously, the company which hasn’t started tweaking things will have more to gain from outsourcing even though both will increase profit as a result.

What are your company’s goals?

Companies are concerned with a litany of things, from delivering better service to eliminating errors. Some want to outsource offshore for additional cost savings, while others prefer to keep the team on-shore or near-shore for greater oversight. These considerations and more determine the cost of operations and how much money can be saved with outsourcing.

What are your company’s biggest challenges?

Many companies consider developing a strong workforce to be their greatest challenge. True, recruitment, training, and maintaining a productive team is a challenge. However, companies may also have concerns with technology; leveraging legacy software while moving towards automation, while others may be focused on reputation and ensuring they shift to outsourcing in a way that honors the employees and community that have been serving them. This is one of the reasons why outsourcing must be customized and BPO costs will vary.

What BPO cost structure will be leveraged?

In more traditional models, the BPO cost structure is straightforward. There are usually startup costs and then monthly BPO fees to cover labor and expenses. However, some outsourcing companies have moved to models in which they earn a percentage of savings or revenue, and others require the legal formation of a joint venture.

Have you worked out your cost per seat calculation in BPO?

Cost per seat calculation in BPO is the rate charged for each person working in a customer service communication role, such as on the phone. This rate varies widely, in part because the skills and services provided by each “seat” are different, but also because there’s typically a charge for each minute on the phone. This in mind, one company may have a cost per seat rate of $150 and another of $250, but the lower-priced one will have higher per-minute rates. In order to know how much outsourcing will save you, you’ll need to know exactly what you’re spending now and do the math to see what you would be paying under a vendor’s cost-per-seat payment model.

Find out how cost-effective business process outsourcing is for your company.

With so many variables in play, it’s impossible to provide figures which will hold true for all companies. If BPO cost is one of your primary concerns, the best way to find out how much you stand to save is to connect with a business process outsourcing company and develop a custom plan.

With three decades in the industry, worldwide reach, and a myriad of solutions at the ready, DATAMARK can help. Contact us to discuss your needs. 

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