Business Process Outsourcing Essential Elements to Look For in Service Providers Proposals

Distance, time zones, culture and language no longer limit where companies of any size have customers, suppliers or service providers in this age of seamless commerce between continents. One key to success - and survival - is finding a reliable, experienced business partner who performs essential back-office services at reduced cost but not reduced accuracy, speed or security.

Global economic changes and technology advances make it vital for companies in a diverse array of industries to examine the benefits of transferring specific businesses processes to a responsive, knowledgeable provider who re-engineers and executes the functions according to each client's standards at a guaranteed cost.

As Business Process Outsourcing (BPO) partnerships become increasingly common, companies lose their competitive position unless they trim expenses by letting domestic or offshore specialists administer routine support functions.

Motivations for Action

BPO solutions let organizations focus on core business operations, improve quality, increase customer response time and reduce capital investment. Instead of using staff, IT resources and office equipment for administrative work, assets can be redirected to the main mission.

While all categories of companies gain competitive advantages, BPO is particularly valuable for mid-size and small businesses. Specialized skills, technology and economies of scale let a partner perform services more efficiently and cost-effectively than insiders can.

Outsourced support includes processing applications, orders, invoices and payments, as well as these functions:

• Credit transactions
• Collection
• Claims verification and adjudication
• Customer inquiry responses
• Payroll and employee benefits management
• Policy renewals
• Document preparation and management
• Explanation of benefits
• Market research
• Electronic record storage
• Mailroom services
• Database creation and management.

Some companies also convert documents via digitizing, scanning or microfilming. Critical records can be stored in secure Internet repository "vaults" for authorized access, and electronic records can be reformatted.

Firms That Benefit Most

These industries are particularly well-suited to gain advantages from the flexibility and innovation that accompanies BPO agreements:

Insurance, financial services, health care, legal, pharmaceuticals, utilities, manufacturing, catalogue sales, direct-mail marketing, transportation/logistics, publishing and government services.

Successful BPO partnerships require a solution provider with industry experience and critical knowledge that exceeds client needs. This lets both parties exchange information smoothly, anticipate each other's requirements and coordinate work flow efficiently. Providers must be intimately familiar with industry standards, regulatory compliance and terms of reference.

Ideally, an insightful provider will add value by suggesting innovative approaches to meet needs without increasing turnaround time, cost or in-house actions.

True Partners, Not Vendors

Whether they are located onshore or overseas, outsourced service providers also must "speak the same language" in terms of business processes, industry dynamics, quality certifications and competitive pressures. The provider should demonstrate a deep understanding of the client business at a macro and micro level. That defines a full BPO partner, rather than simply a vendor of off-the-shelf services.

Potential clients should be confident that the supplier brings not only outsourcing credentials, but relevant credentials. Time should not be spent educating a supplier about details and nuances of the industry.

In addition to vertical industry experience, top-quality BPO suppliers have:

• Experienced, trained full-time staff working around the clock
• Multiple-level accuracy safeguards such as double-key data entry
• Strict quality assurance procedures with manual reviews
• Tested precautions to assure electronic and physical security
• Independent certifications and performance evaluations

Those are basic guidelines for evaluating BPO proposals. A prospective partner's business background, familiarity with Western commerce and record of progressively sophisticated projects also provide evidence of reliability, initiative, innovation and compatibility.

The need for cost-cutting and scalable services remains urgent in virtually all industries as companies position themselves for post-recession growth. Reliable, responsive outsourcing providers are strategic allies for the long term.

Business Process Software

In this article we discuss how Business Process Software actually saves on your bottom line.

In the obvious situation a staff member's entire role can be automated. As a result that staff member's knowledge of the company can be utilised and they could be moved into a more vital position. Another less obvious situation is the simple value of the man-hours of individual staff members. If the Business Process Software only helps to cut back a portion of their work then they are able to use those man-hours for more important tasks. As a result those man-hours that "disappeared" can be said to be earning the company the dollar value of what that staff member was being paid. To demonstrate this we're going to use a few case studies.

In our first example a business was transferring data from an old Custom Relationship Management system (or CRM) to a new web based CRM. The sheer amount of data was incredible. In order to transfer the data they hired three Data-Entry temps to manually insert the data. It was costing $20 an hour, 8 hours a day, 5 days a week and 9% superannuation on top of that. This totalled $872 per temp, per week. The project was looking to last at least another 12 weeks, for an approximate cost of $31,000.

A program was written that collected the data from the old system and automatically entered it into the new CRM. As a result there was no longer a need to hire data those data entry staff. This meant that within a few days ALL of the data was input into the system. Not only did the company save over $30,000 but they were able to very quickly implement their new software, meaning they saved even more money by utilising the new system straight away.

A less obvious example had to do with reporting. At the end of every week the sales department was required to create a report that detailed the calls their sales people made as compared to the sales they made. This data was collected from both sales software and phone software and input into a pre-made spreadsheet. Every week it took 2 hours of processing time, amounting to one-hundred hours of time spent on reporting every year. If we estimated the sales manager's pay rate at $30 per hour, that means that these reports were costing them $3000 per year.

$3000 per year of value might not have seemed worthwhile but the company considered something very important. How could that manager have used those extra 2 hours every week to improve the performance of his sales team? An extra hundred hours a year to review sales calls, provide training, or have a talk to his sales people about their concerns proved to be a far greater incentive than the simple dollar value. This does not take into account the fact that there were five sales teams each of which could use both the added value and the added hours compounding the benefit of Business Process Software.

An even less obvious example was a call centre that dealt with a high volume of calls every day. At the start of every call the staff members asked the customer for their account number and would then input it into their CRM. A simple solution was developed that would use the customers phone number to search for their account details and automatically displayed the customer's details on the screen. As a result instead of the staff members asking for the customer's account number they were automatically able to greet the customer with their name.

While they could have added up all the seconds, minutes and ultimately hours this would save every year the call centre considered something else. Customers who were forced to call back multiple times would be always be frustrated at having to go through the same process every call. They started feeling like they were a number and not a name. This lead to a rise in satisfaction from frustrated customers who were now being greeted by name each call. Which was worth far more than a few man-hours from call centre staff.

A final example came from a security company. Their roster system was a simple Excel spreadsheet that would calculate how much security staff would need to be paid. This was complicated because of penalty rates that would apply, as staff would often begin shifts before midnight and not finish until early in the morning and during this time penalty rates would very often change. But they had a concern, it was against the law to have a staff member on duty who's licence had expired or been suspended.

A small application was implemented that allowed the company to create their roster through a new user interface. The application would check to make sure that their shift would finish before their licence was due to expire. It would also check before each shift to make sure that in the meantime the licence had not been suspended. In this scenario the security company did not value the time saved from the user friendly roster system but the risk management applications of the the new system. They valued the cost of the Business Process Software against the cost of a fine for violating stringent compliance laws in the security industry.