A NEWCOMER S GUIDE TO OUTSOURCING. cbvcollections.com

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1 A NEWCOMER S GUIDE TO OUTSOURCING cbvcollections.com xxxxxxx@cbvcollections.com

2 CONSIDER OUTSOURCING AS A MEANS TO PROMOTE GROWTH AND FLEXIBILITY Our current economy demands a grow or die mentality. In order to stay competitive in today s market, businesses must not only practice mastery of their core processes addressing changing global markets, developing new products, enhancing customer loyalty, and acquiring new clients but also non-core processes such as customer service, billing, and non-customer facing processes. This is where business process outsourcing (BPO) presents itself as a viable option for companies seeking to focus resources on their business specialties, conserving time and energy by engaging a third-party whose expertise centers on facilitating businesses non-core processes. BPO, the contracting of non-primary business activities and functions to a third-party provider, presents businesses with several clear benefits: Business process speed and efficiency are enhanced while costs are reduced. Employees may invest more time in core business strategies to bolster competitive advantage and enhance value chain engagement. Organizational growth increases when capital resource and asset expenditures are not required, which averts problematic investment returns. Organizations are not required to invest in unrelated primary business strategy assets, facilitating a shift in focus to specific competencies. While BPO as a practice has existed for many years, it has done so primarily as a reserve for very large, highly-capitalized companies. The costs were simply too high and the return on investment (ROI) simply too low to benefit a business until it reached a size that all but demanded it outsource its front and back office functions. Technological advances have broken down that barrier to entry. In this white paper we discuss the new paradigm, highlighting how organizations of every size can now outsource processes to take advantage of the global talent, tested processes, and new technological trends to continue to deliver business impact to key operational processes. 2

3 THE COST PLAY Until recently, BPO was always presented as a simple cost play, one with a delineated cost-benefit analysis. Often when companies think about business process outsourcing, they are really thinking about a tactical process change. Perhaps it s an outsourcer moving routine work offshore, taking over system management or leveraging economies of scale in procurement. Any data that has to be entered or processed, any tasks that aren t customer facing, it s all going to save businesses a significant amount of money when outsourced. For many businesses, scaling to meet customer needs translates to hiring more people and acquiring more office space. This impedes your ability to grow and increases costs, which in turn must be passed on to your customers (which also impedes your ability to grow). The increased costs and productivity loss associated with continuously hiring and training new staff can add up over time. You re also stuck with the expense of maintaining these staff levels as you go through times of less volume. BENEFITS Lower operational costs, higher revenue Access to key skills and technology COSTS Loss of control over processes Underestimated running costs Increased service level volume Focus on core business While these better, faster, cheaper initiatives have their place in keeping the business trim and reduce costs, they are not transformative ideas that help businesses thrive in times of change. For the developing business, BPO partnerships also ensure that these processes will be performed efficiently and within compliance. These guarantees remove the internal bureaucracy of developing entire programs and departments to manage growing back-end processes. 3

4 EXAMINING THE SOFT ROI OF BPO More mature BPO customers don t just expect to generate substantial initial savings they expect to increase those savings over time. The lower labor costs are immediately apparent as hard ROI, but it s the resulting soft ROI that makes the difference: By outsourcing non-core processes, you re free to repeatedly BPO companies and their employees provide extensive close more business without worrying about hiring and training experience and training; this is, after all, their core process. They additional people. By spending less on new employees, you also have the ability to spot new trends in the marketplace, have more funds available to retain existing, valued, employees and thus create new processes that provide clients with greater while still saving money in the long run. competitive advantage while operating with more channels than the mid-level company can typically maintain (phone, The ability to maintain a consistent workforce allows you to , and chat). provide quality services at the most cost-effective level, increasing your ability to compete on a global scale. Effortlessly increasing your workforce to accommodate demand from business growth will put less strain on traditional levels of service your current clientele expects, which will help you maintain relationships. Cost reduction is important, but so is your ability to scale and grow to meet your customers service needs. This has led to new thinking on how BPO can add significant value, or direct business impact, beyond the bottom line. 4

5 BPO ECONOMIES OF SCALE YIELD SOFT ROI, DESIRABLE OUTCOMES It s worth noting here that not only can BPO providers offer these services at a cost-effective rate, but also that the candidates they place on your project are typically better equipped for the roles they fill. Because it s their breadand-butter, your BPO provider benefits from the economies of scale that make certain training practices and technology investments worthwhile. For an example, consider outsourcing calling processes to a contemporary, competitive calling provider your outbound sales, customer service, and first-party collections. BPO call service providers offer you the process itself the customer calling and contact time at an optimal rate through automation and manpower analytics that ensure you aren t overstaffing. And they take the service further by providing a customer care experience that preserves the customer relationship by using interaction analytics software that provides solid agent and customer behavioral data found in contact center interactions from sources including audio, chat, SMS, and . By structuring, synthesizing, and analyzing this interaction data, companies can draw correlations, view trends, uncover root causes, and build predictive models that will empower them to approach their customers in new and innovative ways, helping you uncover issues impacting business and develop solutions to resolve them 5

6 THE NEW PARADIGM Until recently, BPO was all about cost efficiency, which allowed a certain level of flexibility at the time. Due to technological advances and changes in the industry (specifically the move to more service-based rather than product-based contracts), companies who choose to outsource their back-office increasingly look for flexibility. So how does BPO lead to flexibility? Companies develop variable cost models over fixed costs. Most services provided by BPO vendors are offered on a fee-forservice basis. This helps companies transform fixed costs (such as salaries) into variable costs that depend upon usage. This allows companies to respond to changing markets as needed, such as a seasonal demand increase or promotional offers, without holding on to assets that are not mandatory all year. A company can maintain growth goals while avoiding standard business bottlenecks. BPO allows firms to retain their entrepreneurial speed and agility, which they would otherwise sacrifice in order to become efficient as they expanded. BPO increases organizational flexibility by increasing the speed of business processes. The hiring process is arduous and costly, and the benefit of having on-demand employees alleviates the stresses of hiring and training candidates for job roles with high turnover. 6

7 WHAT TO EXPECT FROM A PROGRESSIVE BPO SOLUTION But a successful BPO service provider goes beyond; as customers are demanding more value, they focus on the ROI of their BPO initiatives. This includes cost savings associated with complete end-to-end solutions that are reliable enough to work with customers existing technology infrastructure and grow with each customer s growing outsourcing needs. In your partnership, you should expect multiple touch-points beyond your sales representative. Your service provider must work side-by-side with you to ensure that your levels of customer service and company mission are met, fostering an open and innovative relationship to: Engage your processes and aid you in developing business and an understanding of how each of your services contributes to your business within your industry; only then can they show you how their services most benefit you. Focus on constant improvement by providing a high standard of service delivery and management through collaboration. BPO providers in today s market must be approachable and available, taking pride in your services and ownership of their processes. Provide you with results in the form of hard ROI cost-savings and soft ROI increases in business streamlining, delivering on their promised services. 7

8 ABOUT THE AUTHORS OF THIS PAPER The success of a BPO contract depends on the ability to meet the financial, process improvement and service objectives of the initial vision, while adapting jointly with the client to ongoing changes in the business environment. When we at CBV take responsibility for an entire process, not just To realize the future, contact us and we d individual systems or stages, it gives us the ability to offer new, be glad to show you how. business-outcome-based metrics for those processes. This approach has produced impressive results for hundreds of our clients, and we know it will work for you, too. cbvcollections.com xxxxxxx@cbvcollections.com