Business Process Outsourcing: How to Start a Business Process Outsourcing Company

Business processing outsourcing is closely related to the function of outsourcing. It is a contractual agreement between two parties to manufacture or perform a service.

The contracting of a service to a third party is called business processing outsourcing. Large companies especially in Europe and America have found PBO a useful business initiative.

BPO is usually used for Back office services include accounting, finance, human resources and minor front end operations. Others are services like customer relations and contact center services.

BPO provides a seamless operational format for companies to contract a small part of their operation to a third party. They hire outside partners to perform certain non core functions.

 The front office functions generally outsourced are secretarial work, filling documents, accounting and other non core services. Advancement in technology has increased the prospect of hiring highly technical or qualified professionals to do the job.

Others business outsourced are manufacturing, graphic designers, marketers, labor, sewing and paralegal services. BPO has two formats one is outsourcing within the same country referred to as ‘near shore’ outsourcing or outside the country ‘off shore’.

Often manufacturing and information technology are the most common forms of the process

Why Outsource Part of your Business

The major reasons for companies to adapt BPO as a business template are many. The structure effectively reduces the cost of labor, invariably increasing revenue. Other reasons are the ability to hire cheaper highly qualified professionals including reducing overhead such as tax, health insurance, rent, and payroll.

Business process outsourcing increases efficiency and competitiveness in your chosen sector. It also increases company flexibility, cost efficiency, and direct quality control.

India is a major player due to highly qualified workforce and advancement in technology.  This has a great impact on offshore services provided in the country.

 Other production based services are garment, packaging and some labor services. The service trade accounts for billions of dollars in foreign exchange to India.

Other major BPO countries are the Philippines, South Africa and China. A major benefit of BPO is quick and responsive changes in capacity and less investment in assets.

 It allows the company more time to focus on core operations without much bureaucracy. More benefits of operating this process include speed and efficiency, growth potential ad less capital expenditure.

When to Outsource

With all the benefits of efficiency and reduced cost a company might decide to try BPO. The process is not limited to large conglomerates because small and medium companies can also benefit.

The big question is when to use business process outsourcing to re-position your company. Sometimes a company discovers a huge growth in their customer base and administrative functions. This is good but might affect the productivity and capacity of an overworked staff.

The company has to decide on either reducing productivity or re-position the business. They can decide to hire more staff which means more payrolls, heath insurance and overhead costs.

Outsourcing the job to qualified freelancers reduces these costs exponentially.  Another reason companies consider this format is when undertaking a new project.

Instead of adding more workload on in-house staff they can contract the job to freelancers. A major factor that contributes to company deciding on BPO is growth.

Delegating non core jobs through contractual agreements is an effective business strategy. There are many competent qualified professionals willing to do the job for less.

A small enterprise might contract virtual assistants, bookkeepers, project managers, graphic designers and web developers. The need of the enterprise depends on the scope of work and contractual agreement.

What to Outsource

BPOs provide a free-for-service business model such as software development. To free employees from non core administrative process a third party vendor is needed.

You need to determine your core competence, capacity and value before outsourcing any part of your operation. The major tasks carried out by your staff is a no go area because any major drift might adversely affect the company.

There are categories of jobs a company can outsource such as tasks that involve specialized knowledge like information technology. Others are highly repetitive jobs like data entering and skilled jobs like financial analysts.

More examples of repetitive jobs are sewing jobs, assembly, accounts, inventory and sorting. Highly specialized jobs revolve around professionals in certain fields, IT and product development.

Companies might need the services of a highly skilled executive with vast knowledge of financial analysis and business operation. The person could be a retired top member of staff as a consultant.

Who to Hire

Finding reliable and efficient outsource providers is easier in today’s global economy. A few ways to find competent hands is through technology like the internet, networking, and recommendations.

Other ways to find companies to work with is through classified advertisements, and professional bodies. Online resources that help in this regard are freelance websites like freelancers, and ODesk

An amazing thing about business process outsourcing is the flexibility of the process. Your contract is not localized to one country and you cam have people working in different countries and locations.

Before going into contract you need to gather the best information about the company. Seek previous clients and get vital information on the company’s service delivery and work ethics.

Focus on your specific needs to determine the best candidate for the job.

What is Expected?

Once you have settled on a company create a contract that outlines your expectations.  Trust is an important factor in outsourcing your business process. The whole point of BPO is to delegate non crucial business to partner companies.

Cost Considerations

Cost differs according to the involvement and scope of work. Things to consider are highly technical professionals, location and wages.

Outsourcing Problems

It is not all about smelling the roses because there are a few problems that may arise. The major problems with BPOs are over dependency on the offshore company, poor contractual agreement, and poor service delivery.

Other problems are security risks pertaining to information technology, language, patent theft, loss of independence and weak running costs. You need to effectively manage risks to control the business process.

Among all the prevailing problems the most difficult is poor contractual agreement. Generally BPO contracts run from 3 years to 5 years.

Despite the problems BPO provides new business opportunities for growth, development and cost management. Another advantage is the time zone of offshore BPOs that allow extended working hours.

The benefits out way the problems because it allows highly trained professionals contribute to the growth of your enterprise.

How to start a BPO Company

The main function of a BPO company is getting regular jobs. To start this business you need to find your niche.

Then register your company as a limited liability company. Once that is done hire appropriate staff for your organization. The most difficult task is getting top companies to hire your services.

Before approaching any company make sure you have the right equipment and staff to successfully deliver the job. To set up your business you need a business plan, finance, location, qualified staff and marketing.

Outsourcing is beneficial to both parties providing growth for companies and jobs for countless workers. Are you interested in finding companies that outsource their non core operations then learn more.