FAQs
Here you can read our most Frequently Asked Questions about call centers, Business Process Outsourcing (BPO), front office and back office processing. Remember you can also visit our Glossary of Terms.
What is BPO?
What type of activities are suited to outsourcing?
Why do companies outsource?
What are the trends in outsourcing in the next 5 years?
Can medical transcriptions be considered for outsourcing?
Where can I buy market research reports related to outsourcing?
Which business processes are suitable for outsourcing?
Why is outsourcing a key area of focus for large companies?
What is the difference between Outsourcing and Offshoring?
What are some things to consider in a BPO contract?
What are the strengths of getting into an online office like FooBoo when it comes to the outsourcing business?
Who is behind FooBoo?
How do I contact FooBoo to help me take the next step?
What is BPO?
Business process outsourcing means examining the processes that compose the business and its functional units, and then working with focused service providers to both re-engineer and outsource these at the same time. BPO involves the full transfer of responsibility for functions such as transaction processing, policy servicing, claims management, HR, finance, and compliance to the outsourcing company. The outsourcing provider then administers these functions on their own systems to agreed service standards and at a guaranteed cost.
Typically, companies that are looking at business process outsourcing are hoping to achieve cost savings by handing the work to a third-party that can take advantage of economies of scale by doing the same work for many companies. Or perhaps the cost savings can be achieved because labor costs are lower due to different costs of living in different countries (labor arbitrage). In exchange for the potential cost savings, the company in question must relinquish control over an aspect of their business that explains why business process outsourcing is often reserved for non-critical, non-core type of work.
What type of activities are suited to outsourcing?
Typically BPO is divided into two areas Front Office & Back Office
Front office
Inbound sales
Outbound sales
Telemarketing
Customer service
Help desk
Order processing
Technical support
Appointment setting
Debt collection
Market research
Back office
Accounting
Data entry
Database management
Claims processing
Transcriptions
Lease abstraction
Data extraction
Human resources
Why do companies outsource?
- Reduce and control operating costs
- Improve company focus
- Gain access to world-class capabilities
- Free internal resources for other purposes
- Gain access to resources that are not available internally
- Accelerate reengineering benefits
- Handle functions that are difficult to manage or are out of control
- Make capital funds available
- Share risks
- Bring in a cash infusion
What are the trends in outsourcing in the next 5 years?
Over the next 5 years, outsourcing will experience three key trends:
1) Broader adoption of outsource models by companies of all sizes and in many more countries. Today much of the outsourcing is taking place in the United States and to a lesser extent, the UK, and primarily in large companies. However, we are seeing significant interest and uptake in almost every country around the globe with countries such as Australia moving rapidly to an outsourcing model.
2) Movement from transaction oriented, tactical outsourcing to transformational outsourcing on a strategic level. Businesses will expect much more than just being able to reduce costs although that will continue to be a key driver. Businesses will look to outsourcing to provide them with a faster time to market for products and services, greater market reach, and higher value out of their core set of employees.
3) Dramatic increase in numbers of countries that seriously develop and promote outsourcing through government policy and support and industry involvement. New countries coming to the forefront along with communications and IT technologies allow for work to shift in and out of countries more easily that ever before.
Can medical transcriptions be considered for outsourcing?
Yes.
Where can I buy market research reports related to outsourcing?
See our Market Research section.
Which business processes are suitable for outsourcing?
The targeted business processes generally fall into the six areas:
1. Sales, marketing, and customer service - call center, appointment setting, telesales, database marketing, Web sales, and marketing.
2. Human resources - payroll, benefits administration, education, and training.
3. Logistics/distribution - procurement, transportation, warehouse management, and material management.
4. Payment services - credit/debt card processing or check processing.
5. Finance/accounting - accounts payable/receivable management, risk management, and general accounting.
6. Administration - tax processing, claims processing, and document management.
7. Manufacturing - design, production and component inventory management
8. Information Technology - application development and maintenance, desktop support and helpdesk support.
Successful BPO requires three acts:
1) selecting the right activities to outsource,
2) identifying the right supplier to provide the services, and
3) ensuring the right governance approach for the relationship.
Why is outsourcing a key area of focus for large companies?
Most of the back-office infrastructures of large firms were built for a previous era - preglobalization, pre-Internet, and pre-M&A. They must change quickly to meet the need for economies of scale and higher competition. For the large firm, the benefit of BPO is access to best practices, which in turn enables improved efficiency and substantial cost savings.
BPO makes sense in a fast-moving world where management attention needs to be on critical operational processes and where management talent is scarce. Doing fewer things well and delegating what's non-core externally is strategically crucial. Back-offices, while important, are largely non-core.
Corporations are ready for BPO. They understand traditional outsourcing and are more comfortable embarking on more complex outsourcing engagements.
What is the difference between Outsourcing and Offshoring?
Offshore development and maintenance is a subset of outsourcing. The outsourcing provider may perform services on shore, offshore, or in some combination of the two. Increasingly companies are looking to the markets of the Asia Pacific choosing locations such as the Philippines, India, China, Malaysia and Australia.
The decision is based on a variety of factors, not the least of which is customer preference. Another phrase being used more widely is "near shore," which normally means work done in outside the US in neighbors to the immediate north or south, Canada, Mexico or Caribbean. Offshore outsourcing is gaining a bigger share of the BPO market. Reasons for this being many large corporations are demanding that offshore services be included in a competitive outsourcing bid. These customers have been attracted by offshore vendors offering substantial price savings ($20 - $30 per hour) for IT services like software code writing and testing, as well as for business processes supported by IT, like claims processing or customer support.
What are some things to consider in a BPO contract?
Some critical issues to pay attention to in a BPO contract are:
• Work scope
• Rates
• Term & Termination
• Performance Guarantees
• Deflationary Pricing over length of contract
• Training costs
• Data Security, Privacy, Confidentiality and Continuity of Business
• Indemnification and Insurance
• Financial Strength of Vendor
Fixing a poorly defined contract during a project is very difficult. So getting it right is extremely important for the overall success of any BPO engagement.
What are the strengths of getting into an online office like FooBoo when it comes to the outsourcing business?
FooBoo is connected into the marketplace and connected at the right decision making levels in the corporate board-room. FooBoo is also a market maker which means that we serve as a champion and catalyst for businesses to choose outsourcing and off-shoring as a viable way to improve their top and bottom-line business results. The FooBoo brand stands for high quality, peace of mind results, and partnering with the best. By partnering with high quality service providers, FooBoo will deliver against the promise of quality and keep the relationships strong and prosperous for all parties for many years.
How do I contact FooBoo to help me take the next step?
Contact us here.