BPO and SSC: Driving Efficiency Through Business Process Outsourcing
Overall satisfaction resulting from collaboration with your company is a byproduct of various processes functioning (or not) within your organization. Core business activities—the actions for which your company was established—often require the implementation of additional tasks essential to support its primary operations. The work of this administrative backbone is usually not directly visible but is crucial for clients or partners and influences their perception of your company.
However, young enterprises, due to their scale of operations, are often unable to cover multiple processes simultaneously and may settle for low quality or lack of actions in specific areas. Imagine your company specializes in selling products. In the initial stages, it doesn’t focus on organizing customer service because there aren’t many customers yet. Over time, the number of orders and clients grows, and your customers, just like at the beginning, need to be served quickly and accurately, expecting their concerns to be addressed and complaints resolved promptly.
Organizations that grow rapidly, aim to be competitive, and simultaneously operate their budgets optimally often decide to engage in business process outsourcing (BPO). This solution allows them to continue focusing on their core business while effectively delivering modern business services by leveraging the experience of external service providers. In doing so, they provide their clients with a sense of security and satisfaction, and themselves with a positive market reputation.
In this article, we will discuss what BPO is, the benefits of BPO, and the challenges associated with its implementation.
What is BPO – Definition
Business Process Outsourcing (BPO) involves contracting a third-party service provider to perform essential business functions for an organization. It entails transferring selected business processes to an external service provider who can handle them more quickly, cost-effectively, and efficiently. BPO services can include customer relationship management, business process management, IT support, accounting services, HR services, quality assurance, and more. This broad scope highlights why BPO is considered a versatile tool for various business activities.
Often, in the context of BPO, we refer to Shared Services Centers (SSC), which specialize in repetitive business processes across an organization, including accounting and personal data processing. An SSC is a specialized unit within a large company, usually consisting of the company’s employees. Sometimes, it can be an external service provider for other companies. The difference between BPO and SSC lies primarily in their ownership and operational structure, though both aim to optimize business operations.
Within BPO and SSC, processes impacting the core activities of an organization are carried out. Although these processes are typically not directly visible and are considered back-office functions, the quality of their execution determines the company’s image. These are sometimes called internal business functions.
The Role of BPO in Organizations
The role of outsourcing in organizations is significant, especially in the American market, which represents a substantial sector for companies utilizing BPO services. Primarily, it helps organizations reduce costs, increase efficiency, and implement new business processes more effectively. Additionally, it allows companies to focus on core business and growth.
Outsource processes enables businesses to concentrate on their core business activities that generate revenue while utilizing the expertise of professionals who can perform specific tasks more quickly and efficiently. This is one of the primary benefits of BPO.
BPO can also provide organizations with flexibility in implementing new business processes. Since external service provider companies offer services in customer relationship management, business process management, IT support, and more, organizations can easily adapt their business processes to changing market needs. This flexibility allows organizations to be more agile and implement new business processes in a shorter time frame.
At the beginning of their operations, companies often rely on BPO services. As they grow, they may acquire the entity providing BPO services and transform it into their own SSC. Ultimately, the goal for large companies is to establish an SSC within the organization.
Read more: What is outsourcing of services, and how does it work? Can it benefit your company?
What BPO Companies Offer
The range of services provided by BPO companies is extensive—they can virtually replace any sector or department within an organization. This includes administrative services, business services, customer service, sales support, IT support, accounting services, HR services (human resources), training services, and quality management services (quality assurance). In essence, organizations utilizing BPO services offload certain processes and repetitive tasks. There are many types of BPO, such as knowledge process outsourcing and legal process outsourcing, highlighting the versatility of the BPO sector.
BPO firms can provide outsourcing services in project management, consulting, ERP system implementation, technical support, customer support, website development, and more. They often utilize advanced technologies like robotic process automation to enhance efficiency.
They may also offer outsourcing services in risk management, quality assurance, and the implementation of new business processes, such as risk identification, risk assessment, and risk management. This comprehensive approach is part of what BPO offers to its clients.
Benefits of BPO
Business Process Outsourcing is a highly flexible tool that can be applied to various objectives, including offshore outsourcing and IT services. For instance, if a company faces challenges with work efficiency, it can outsource specific tasks in customer relationship management, sales support, or IT support to an external service provider. This approach allows the company to focus on core business functions while leveraging outsourcing services to enhance work efficiency, a key aspect of business process offshoring. The benefits of business process outsourcing are numerous, including cost reduction and access to specialized expertise.
The BPO sector assists organizations not only in optimizing their business processes but also in reducing costs. Help companies avoid the expenses associated with establishing new departments (investments in equipment, recruitment, and training) and instead have predictable costs that can be easily defined as revenue-generating expenses. Implementing BPO processes in this manner helps increase the company’s income, which is crucial for organizations. This is one of the key advantages of BPO.
Launching BPO also allows organizations to benefit from experienced and trained experts who can perform specific tasks better and more efficiently.
Since external service provider companies offer a wide range of outsourcing services, organizations can quickly and effectively adapt their business processes to changing market needs. They have access to the latest technologies and tools, which can aid in optimizing their business processes. Consequently, companies can focus on core business improvements and innovative solutions. This adaptability makes BPO a valuable part of modern business strategies.
Read more: Contact Center Outsourcing – Does it Bring Value to Your Company?
Challenges Associated with Implementing BPO
Although BPO may seem like the best solution, it does come with certain limitations. These are often referred to as disadvantages of BPO or risks of business process outsourcing.
First and foremost, companies must define which services they want the third-party service provider to perform with the appropriate quality. This requires the creation of a range of procedures and key performance indicators (KPIs), which are among the best practices in business process outsourcing. The accuracy of this step will determine the service cost and future cooperation. Any oversight at this stage will result in consequences affecting the continuity and quality of the outsourced process. This highlights the importance of a well-defined BPO contract.
Let us imagine a scenario where, in the procedure for the customer service process outsourced to a BPO provider, the company did not include the requirement to conduct a customer satisfaction survey 30 days after contact with the customer. The outsourcing service will be priced lower because the BPO company will not need to allocate human resources for this task or track the timing of contact in relation to the KPIs.
Read more: How to conduct a survey with customers?
To the client outsourcing the service, this may seem attractive cost-wise at first glance, but in the long run, the lack of surveys will impact the quality of customer service (customer experience). There will be attempts to renegotiate the BPO contract with the BPO provider and to amend the procedures during the ongoing process after the tender has been concluded, making it impossible to verify whether the process is still priced at market value. As a result, the company outsourcing the BPO process will suffer twice—first through the decline in service quality, and then through the additional costs of implementing changes.
This mismatch can be limited, especially when working with a BPO firm with extensive experience in the outsourcing market, which knows that unforeseen situations do occur. Therefore, it is not always advisable to choose a BPO partner based solely on price and select the cheapest service provider. The BPO market is vast, and finding the top BPO for a specific business requires careful consideration. The worldwide BPO market continues to grow, and choosing the right partner is critical for global business success.
In conclusion, it is crucial to clearly define the needs and expectations toward the business process outsourcing provider to avoid quality issues and additional costs in the future. Well-implemented outsourcing services and shared service centers allow companies to focus on core business activities. At the same time, they reduce costs by eliminating the need for in-house investments in equipment and personnel, and they increase efficiency by leveraging third-party vendors to handle specific tasks. The solution offers a broad range of services provided—from customer relationship management to sales support (customer support). This encompasses many examples of business process outsourcing. Since it ensures access to new technologies, it allows organizations to flexibly adapt to changing market demands. This is part of the overall guide to business process outsourcing.
If your company wants to improve customer service quality and focus on core business areas through BPO solutions, we invite you to contact us. Our specialized contact center outsourcing services, including expert call center operations, can enhance the performance of your customer service department and support your sales efforts. The BPO team is ready to provide comprehensive BPO solutions. Explore our service offering to learn more and start benefiting from the advantages of business process outsourcing.
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