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published on 18 June 2020 | reading time approx. 4 minutes
Author: Kristin Lauritzen
BPO, Shared Services and Offshoring have long been a reality for most large and internationally operating corporate groups, but also for small and medium-sized enterprises. The rule of thumb is that outsourcing is a perfect solution, in particular, for less complex and cost-intensive tasks, which involve large economies of scale and can be performed regardless of the location, as well as less competitive business processes.
The aim of outsourcing is to increase process efficiency, improve quality and reduce costs. As a rule, it has been proven that outsourcing of functions to third parties offers greater cost advantages than relocating business functions internally, i.e. to other offices. The main focus of BPO is on core competencies and cost savings.
The Covid-19 crisis has affected almost all sectors of industry worldwide due to disrupted supply chains, nationwide lockdowns and the sudden confrontation of companies with long-term or even permanent remote work.
The outsourcing sector has been affected by Covid-19, as well. Outsourcing service providers, in particular, are struggling with travel restrictions, because it's often impossible to sell complex services without personal customer contact and the related travelling. Likewise, BPO companies were also compelled to send their employees home and work remotely. However, home office job postings were often something very unusual for the industry. Many outsourcing service providers do not have the equipment, infrastructure or management tools to enable their employees to work remotely. The main concerns of BPO companies are data security and the impact on productivity due to insuf-ficient infrastructure of their employees at home or lack of supervision.
Not only outsourcing service providers, but also the companies are faced with the challenge of remote work.
This situation will encourage many companies to open up to digitalisation and automation of their work processes. The crisis experience is expected to give impetus towards modernisation. New technologies such as Artificial Intelligence to record creditors, which could be handled without the in-volvement of employees, could be used more often. The stigma surrounding companies that they need their own employees and BPO service providers in the company's office will ease and will finally no longer exist.
Given this background, companies are increasingly thinking about their core competencies. In the first place, it should be examined which components of the value chain are essential and which of them are better handled by other market participants. The main question is: What makes companies more competitive and crisis-proof than others?
Ultimately, demand for outsourcing services will increase. Outsourcing is a suitable means to get out of the current crisis quickly and ensure competitiveness. Therefore, the industry is expected to quickly recover from the crisis and the outsourcing sector to have more relevance and become more popular than ever before. In the current crisis, customers often decide much faster to implement projects that reduce costs quickly, increase performance and pay dividends fast.
Future-proofing the business of BPO service providers and their employees depends on several parameters, including the ability to adapt to new work arrangements and the willingness to work cross-functionally and remotely. What should BPO companies focus on to prepare for a new “remote” future?
The future of the BPO industry will be very virtual. After overcoming some mistrust towards service providers who do not have a physical office, companies can now focus on stronger arguments for cost reduction and remote employment.
The Zoom era is still in its infancy. Many of the new popular work-from-home solutions are relatively new innovations, and it took a while for these tools to become part of everyday life. The real challenge is to work from home and still feel part of a cohesive corporate culture.
BPO companies should therefore increasingly focus on providing appropriate work-from-home solutions. Necessary steps should be taken to offer satisfying solutions for the staff and ensure the quality of their work. Appropriate measures include regular contact with employees and updates, as well as daily team meetings to check work progress.
The age-old argument why companies should have a physical office has always been productivity. It was generally believed that employees work more efficiently through personal cooperation with their colleagues.
With tools such as WebEx, Slack, Zoom and especially BPO-specific efficiency tools, the productivity argument is no longer valid. Working from home is as easy and efficient as working in the office. Also the transition to standard cloud-based work platforms can reduce manual workload and lead to work automation, improving employee efficiency and effectiveness.
If remote work is the future of BPO companies, an appropriate framework for that should be created. Confidentiality, integrity, availability and reliability of information to be processed are therefore the central objectives, just like transparency and revision-proof storage.
The performance of BPO service providers is thus highly dependent on the availability and quality of information technology services. This requires not only having on site (company) computer equipment tailored to the specific needs of the company. Processing personal information of a customer, such as credit cards and social security numbers, also requires the use of processes and technology that will protect information from being read or intercepted by unauthorised parties.
Digital competence is another key factor for success in the “new normality” to come. While taking into consideration data protection regulations, it creates the optimal technical gearing in order to optimise mutual communication, data and process workflows.
When implementing national and global projects, diverse tools should thus be used more intensively in order to ensure smooth collaboration between the client and the service provider. The aim is to document and monitor defined processes in order to ensure the highest possible degree of compliance and transparency towards the client.
Due to the rapid spread of Covid-19 around the world, also BPO companies are faced with the challenge of changing working conditions. Remote work seems to be a real alternative here. It is the perfect moment to focus on the technologies and processes that enable companies to better manage the remote work of their employees.
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Ulrich Schäfer
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