Business Process Outsourcing & SMEs

By Daya Mukherjee Jul 16, 2018
Business Process Outsourcing & SMEs

It isn’t surprising to see that numerous new businesses especially small and medium enterprises (SMEs) are going for outsourcing. There are many companies who prefer to outsource to India and other outsourcing hubs because of the quality of work and lesser cost. Through business process outsourcing, businesses are looking for better savings and enhanced business processes. Stephen Covey rightly said, “Outsourcing is inevitable, and I don’t think it’s necessarily treating people like things.”

BPO Game Is On

Companies of every size resort to outsourcing mainly because of the soaring operational costs. According to Juan Paolo Araneta, head of Prople’s business development and project management group, businesses can save 15 to 20 percent of operational costs through business process outsourcing. However, in the current scenario, the percentage is even higher. Some SMEs could save more than 40% of operational costs through outsourcing. Add to it the significant process improvements through outsourcing and you have the proverbial icing on the cake too.

The BPO Advantage

Lack of proper infrastructure and inefficiencies in business processes in departments like finance, data management and accounting lead various SMEs into outsourcing. Even today, SMEs are always looking to hire remote employees who are technically sound. Outsourcing vendors or firms can also assist the SMEs by offering technical industry services and helping them reduce their full time employees (FTEs) required for a single project. It is important for all businesses to focus on business stability apart from profits. Their business goals should include focusing on what they are good at and leaving the rest for the BPOs.

India’s BPO sector experienced rapid growth and their services expanded from voice to non-voice services. Non-voice services are mainly offered by knowledge process outsourcing (KPO) and health information management (HIM) companies. Other segments that have seen huge growth include IT services, animation and gaming development and LPO (legal process outsourcing). Famous Indo-Australian writer and journalist, Aravind Adiga once commented, “India’s great economic boom, the arrival of the Internet and outsourcing, have broken the wall between provincial India and the world.”

The Disadvantage

There are some entrepreneurs who dislike outsourcing their tasks because this would mean that they would have less or limited control over projects to be executed. Ensuring quality becomes a difficulty; however, such issues can be resolved through diligent planning.

Outsourcing Trends

The power of World Wide Web or the internet and the rapid growth of online collaboration tools have changed the very face of small business outsourcing in the last two decades. The number of independent outsourcing contractors has also grown in leaps and bounds. And with the phenomenon of outsourcing becoming increasingly popular, a few remarkable trends have noticeably cropped up.

a) Outsourcing Life Is Trendy

Various entrepreneurs are realizing that they can get their work done through outsourcing companies or if they outsource to India. Statistics published by US Small Business Administration show that 56% of small companies in the U.S.A. with 100 employees or less, have further downsized to less than 5 employees. So, even as a solo businessman, you can manage your business through business process outsourcing. You can simply outsource your work to a trusted outsourcing firm and focus on what you can do best. This will also bring a lovely balance in your personal and professional life. Considering the economy and growing expenses, more businesses will choose to go for outsourcing rather than hiring new employees.

b) The Trust Factor

Businesses have started trusting people whom they never met in person. Skype chats and calls and social media platforms prove how different people from different backgrounds and nationalities can bind and build good relationships. A lot of small businesses are resorting to social media channels to get in touch with their prospective outsourcing partners.

c) The Talking Game

The mantra for outsourcing success is “Talk, Talk, Talk.” Seamless operational structures are those where communication play a vital role. Good communication helps in hassle-free project management which includes defining responsibilities clearly and providing feedback to the people concerned. For instance, there are entrepreneurs who prefer to have regular telephonic or Skype calls to stay connected with their virtual or remote employees and manage a project effectively.

All Is Well That Ends Well

Kuan Yew once opined, “If you deprive yourself of outsourcing and your competitors do not, you’re putting yourself out of business.” By outsourcing your work, you don’t have to hire extra full-time employees, which also means that you save on the costs associated with recruitment, employee benefits and remunerations. The best part is that you can assign your existing employees to main jobs or core functions. Outsourcing is temporary, so you can outsource your work to various outsourcing firms or freelancers, who have access to a bigger talent pool overseas. Ultimately, the trick is to get the job done, in the best and least expensive way possible.

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