Offshore Business Processing or offshore BPO can be beneficial to your business no matter what industry you’re in or what country you operate in. But taking on these services is not always an easy decision to make, and you might have some hesitations about going overseas with your business processes and customer interactions.
In this guide on offshore BPO, we cover some of the most common questions and concerns people have about outsourcing their business processes to an overseas location, such as what is BPO offshoring, its benefits, and its limitations.
Read on to find out how offshoring BPO could help your company in many ways.
Table of Contents
What Is Offshore BPO?
Offshore BPO is a process of outsourcing in which one company hires another company in a different country to handle some or all of their internal business functions.
Offshore outsourcing allows you to save money, streamline your business processes and free up time for your employees.
When you outsource your business process offshore, it allows most or all of your processes to be performed outside of a company's normal geographic location.
An offshore business process outsourcing operation is usually established in a developed country where costs are lower.
This is most commonly done with customer service and technical support, but it can also be used for product development, marketing, accounting and more.
With the world becoming increasingly interconnected and digital companies relying on fast turnaround times (sometimes from moment to moment), turning to a distant country that has a lower cost of living than your own can help you stay competitive.
What Are the Most Popular Industries for Offshore BPO
More and more businesses are looking towards new global markets as sources of revenue and growth. While this isn’t something that can be accomplished overnight, it’s certainly a worthwhile pursuit if you have the patience and determination to see it through.
In order to effectively get your business into these new markets, you’ll need to gain access to offshore business process outsourcing.
Here are the most popular BPO offshore sectors:
1. Customer Support
One of the most popular industries for offshore BPO model is customer support. Business process outsourcing companies specializing in customer support handle emails, social media, live chat support, mobile support, and set up call centers.
Call centers include not only inbound but outbound as well. Outbound call centers allow you to reach out to your potential clients, which can result in lead generation. But you’ll have to be available at your clients’ time.
When you outsource these services across the globe, you’ll have an expert team available 24/7, catering to your customer’s needs. And of course, happy customers always equate to good business.
2. Data Analysis
Data is a valuable asset. If you want to get the most out of your data, you need experts to make sense of the raw information. Additionally, if you want to uncover useful insights, you’ll have to mine and analyze vast volumes of data.
This is where offshore outsourcing services come in handy. They have access to expert analysts who can help interpret large volumes of data quite efficiently. You can then use it to understand your market, clients, and any other business functions.
For instance, a contact center uses data analytics to sift through their massive data. They then derive actionable insights on customer satisfaction, products, markets, lead generation, etc. Companies can leverage these insights to tailor their business services or products to suit their customers accordingly.
3. Finance and Accounting
Offshore BPO providers are in high demand. They offer a range of services, including accounting and finance, customer services, technology and software development, recruitment and human resources outsourcing (HR), etc.
A finance and accounting BPO provider offers services like bank reconciliation, payable and receivable accounts, bookkeeping, tax planning, returns, etc. Being specialists in their field, they always strive to deliver the best by adding value to your business.
For example, they can automate your business functions by adopting technological solutions like cloud-based finance. It can make your operations agile, automated, and efficient, redefining the very structure of your business.
They also offer financial insights, forecasting, investment management, budgeting, etc.
In the BPO industry, KPO (Knowledge Process Outsourcing) is a type of BPO that focuses on outsourcing information-based tasks. It usually involves outsourcing tasks that are data-driven and require business insights.
For example, if you’re running an export-import company, you can employ KPOs specializing in legal service to sift through the legal processes. They can help you understand legal guidelines, vendor contracts and tax laws of the countries you do business with.
Since it’s their specialty and they have trained experts for the same, they’ll cover grounds better than an in-house team — also saving you from the trouble of nurturing an in-house team.
Research and development (R&D) are essential for any company to innovate their industries and make good business calls. Any business decision needs careful analysis. You can outsource the process to BPO providers who specialize in R&D to utilize the pool of researchers at affordable wages.
Adding research and development to any wing of your operations will add value. It’ll allow you to devise efficient ways of operating your business, increase your scalability, and find market gaps you can profit from.
R&D is also important for expanding into new markets or increasing sales within existing markets. For example, if you own a clothing brand and want to expand into online retailing, then conducting customer surveys will help determine what products are in demand and how best to sell them online.
6. Sales & Marketing
Offshore BPO companies are a great way for companies to outsource their sales and marketing functions. In fact, the offshore BPO sector includes outsourcing work such as marketing (telemarketing, and advertising) and sales that would otherwise cost a ton in the homeland.
Offshoring sales and marketing to a BPO company is a strategic move that’ll also allow you to tap into international markets.
In addition, an offshore BPO company will be able to give you the best results because they understand the different cultures, languages, and business practices of other countries.
Other industries that utilize offshore business process outsourcing include:
- Transportation and travel
- Government and public services (public sector)
- Retail and consumer goods (retail)
What Are The Benefits of Offshoring BPO
While there are differences between offshore, onshore and nearshore business process outsourcing (BPO), they all have the same goal: to increase profit while keeping costs down.
Nearshoring companies, in particular, provide a balanced approach. They combine cost savings with fewer challenges related to time zones and cultural differences.
However, offshoring offers many benefits as compared to onshore and nearshore.
- Cost Savings
- Access to a Wider Range of Skills and Resources
- Access to a Wider Range of Markets
- Increased Flexibility
- Access to a Wider Range of Technology
- Lower Wage
- Increased Efficiency
1. Cost Savings
By outsourcing your business processes, you can eliminate many of the costs associated with sending employees offshore (such as travel, lodging, time spent on cultural adjustment). Data shows that companies can save up to 30% through outsourcing payroll and human resources, for instance.
2. Access to a Wider Range of Skills and Resources
Your offshore BPO provider will have expert knowledge in all aspects of your industry and the necessary hardware, software, and staff that are required to complete complex projects quickly and accurately.
3. Access to a Wider Range of Markets
With an international presence, companies like yours can reach new markets easily through their existing suppliers’ distribution channels or through direct sales channels they set up themselves.
4. Increased Flexibility
With offshoring BPO services, you have more options and solutions when it comes to handling service disruptions.
5. Access to a Wider Range of Technology
The increased use of technology in business today allows many companies to stay ahead by outsourcing their IT workloads overseas where there are skilled professionals who can develop products faster than ever before while still maintaining high-quality standards
6. Lower Wage
Offshoring BPO means cheaper labor can be used to perform these tasks than would otherwise be possible in the company's home country.
7. Increased Efficiency
By outsourcing certain tasks to an expert third party company, you'll have more time to focus on other aspects of running your company—like improving customer service standards or increasing sales numbers—that will help lead to growth over time. In a study, nearly 54% of all companies utilize third-party support to engage with customers.
What Are The Limitations of Offshore Business Process Outsourcing
Offshore outsourcing comes with its share of limitations and disadvantages. As with any business venture, the limitations include:
- Lack of Communication
The quality of the labor force, for instance, may not be as high as it is in the West, and cultural differences can pose issues.
Many people associate outsourced workers with those in other far-flung regions where English is a second language. In fact, some outsourcing companies employ developers from Western countries to handle client requests that must be responded to in native English.
This is the most common scenario for offshore business process outsourcing because many companies need their support staff—customer service agents, HR managers and marketing professionals—to write emails, send letters and respond quickly to clients over email or phone calls in native English.
Lack of Communication
When you outsource work to another country, you have to be prepared for the fact that you may have limited communication with your employees or outsourced company due to the time difference between locations.
This can make it difficult to solve issues as they occur or get updates on tasks being performed.
When you outsource operations such as data analytics and finances, it’s only natural to be concerned about your company’s data security. According to Deloitte, 68% of companies' main concern is data security when it comes to choosing a cloud service provider.
Ensure that your company’s and employees’ personal data are protected from data breaches. Have NDAs in place and a solid risk assessment plan to protect your IP rights. Ensure that this is included in a BPO agreement between your business and the third-party service provider.
Protect your physical assets with surveillance technology. If possible, you can also limit unwanted access to your assets.
You may do your due diligence by hiring a third-party data security consultant to prepare your BPO vendor to handle your company’s sensitive data.
Offshore Business Processing Takeaways
Offshore BPO is simply a way of saying that you have chosen a business partner outside of your own country for certain fundamental business processes or interactions with your customers. This process provides an enhanced customer experience which can enhance loyalty, increase customer lifetime value and, ultimately, profitability.