How a BPO organization’s role is changing (and what you can do to adapt)

Enterprises have been outsourcing their low-value, administrative tasks to BPO companies for decades in order to get certain jobs done faster and in ways that are cost-effective. Hence, BPO companies have relied on low-cost countries to staff their workforces. 

However, the recent technology and socio-economic disruptions have started to affect this model and make it more difficult to sustain. You can read on to learn about these challenges and how you can overcome them.

The threats to the current business model of BPO organizations

There are 4 primary threats:

1. Insourcing with automation

Some organizations haven’t been happy about outsourcing their work to a third-party BPO organization as it prevents them from controlling service quality. But now, they have various automation technologies at their disposal that can get the same jobs done. These technologies serve the same purpose of accelerating tasks and minimizing costs, but also allow the organization to maintain control. 

The trend towards replacing BPO organizations with automation technologies seems to be playing out on a massive scale already: According to a report by Bank of America, many countries that had off-shored and outsourced their work in the past are likely to bring the jobs back to their home markets.

2. Higher attrition rate

The BPO sector has always had a high level of attrition, but the pandemic has caused even higher levels of churn. For example, HFS Research estimates that the attrition rate of the Indian BPO industry is now hovering somewhere between 30 and 50%—which is quite higher than pre-pandemic levels. 

HR departments are, as a result, spending enormous amounts of time on hiring and training new employees. And considering that every new hire requires several weeks, if not months, to get fully onboarded, this endeavor may eventually prove unsustainable.

3. Rising wages

With inflation spreading all over the world, BPO organizations are feeling the effects in the form of higher employee wages. As a result, if they want to retain their top talent, they now have to shell out more money, which reduces their profit margins.

4. Local hiring regulations

Many countries have now introduced local hiring regulations in order to boost regional employment and prevent companies from outsourcing their jobs to a different country.

Related: How a BPO organization can adopt an autonomous contact center

The new role of BPO organizations

With the current tier of the outsourcing value chain getting disrupted by various factors, BPO organizations have no choice but to climb up. 

They need to restructure their existing business model to offer more value-added services to customers. More specifically, they need to own high-value jobs for their customers and directly solve their business problems.

In this new role, BPO companies will become the master orchestrator of their customers’ business processes. They’ll provide end-customers with enterprise-wide integrated process flows and data fluidity via an easy-to-use interface. As a result, end-customers will not only operate in ways that are more agile and transparent (as data will be accessible throughout the organization) but they’ll also be able to innovate and transform their processes through enterprise automation.

Let’s take a closer look at how business process orchestration will reshape how BPO companies engage with end-customers:

• Customizing solutions: BPO organizations need to customize their solutions, as one size will not fit all their customers. For example, one customer might need to outsource a whole department, while another might need help with setting up their captive center. In short, BPO organizations need to be flexible and capable of executing the best possible solution for each end-customer—and enterprise automation empowers them to do just that.

• Integrating resources: This would encompass the larger business ecosystem—including the outsourced, captive, and partner organizations. The end customer would have access to the whole enterprise’s data, thus bringing transparency in terms of how everything is performing and making it easier to map performance to KPIs.

• Improving customers’ financials: With the new role, BPO organizations’ jobs will not end with executing low-value tasks cost-effectively—they have to improve their customers’ revenue (that said, they still have to reduce the cost of operations in order to improve margins).

• Operating intelligently: Last but not least, BPO organizations will be technology-focused, where anything that doesn’t involve decision making should be automated.

The age-old model of billing a massive headcount, which has worked for BPO organizations up until now, isn’t future-proof. Instead, they need to re-evaluate and re-structure their business model so that it uses enterprise automation to perform repetitive processes and calls for human intervention only on value-added jobs. 

In-short, this labor-intensive industry has to change its structure and execute a new model that uses a mix of digital technology and skilled employees.