What is a BPO business? A brief explanation of the differences from outsourcing and the benefits of introduction

In recent years, due to the serious labor shortage, the need for “BPO” is increasing in various industries. What exactly is BPO that many companies have introduced? In this article, we will explain the outline of the BPO business, the difference from outsourcing, the advantages and disadvantages of introducing BPO, and the points to note when introducing it.

What is BPO business?

With the declining birthrate and aging population, the working population is shrinking, and many companies are facing a serious labor shortage. If the burden on each employee increases due to a shortage of manpower, it may lead to inefficiency in operations and a decrease in productivity. Therefore, “BPO business” is attracting attention as a method to solve the labor shortage.

In the first place, BPO (Business Process Outsourcing) means to outsource the business process of the company . A business that provides this BPO as a service is called a BPO business.

In BPO, you can outsource not only some operations but also departmental units. If you outsource your weak or less important areas to a highly specialized external company, your employees will be able to focus on important tasks.

Difference from outsourcing

Outsourcing is when a company outsources part of its operations or procure the parts necessary for the execution of its operations from an external source . BPO is a form of outsourcing, and while it has in common the fact that operations are outsourced, there are also differences.

Outsourcing generally does not include business processes in outsourced work. On the other hand, BPO has a wide range of operations and targets, and can be outsourced from business process planning and design to implementation, effect analysis, and operational efficiency improvement.

In addition, while outsourcing often involves temporary outsourcing, continuous outsourcing is also possible with BPO.

Advantages of introducing BPO

By introducing BPO, you can get the following benefits.

Strengthen your main business

As mentioned above, understaffed companies place a greater burden on each employee and are unable to focus on important tasks. If you introduce BPO, you can outsource all non-core operations. By outsourcing low-priority tasks, you can create leeway and significantly reduce your workload.

This makes it easier to invest personnel and funds in operations that are likely to be directly profitable, and strengthen the company’s main operations. If BPO solves the labor shortage, it can be expected to improve operational efficiency and productivity , which will lead to an increase in corporate profits and securing superiority .

Utilize the know-how of specialists

By introducing BPO, it is possible to deal with fields in which we are not good at or work without know-how.

BPO operators have their own fields of expertise and areas of specialization, and they appoint specialists. By utilizing accumulated know-how and resources that we do not have in-house, we can expect to improve the quality of our operations. Dedicating a specialist to the task reduces mistakes and enables smooth and prompt responses to problems, which leads to improved customer satisfaction and trust in the company.

In addition, BPO can relieve employee anxiety and burden. Depending on the field, the systems and systems change every moment, so there are times when we need to constantly collect information and respond accordingly. If you introduce BPO, specialists in each field will respond appropriately, so your employees’ worries and anxieties will be resolved and you will be able to concentrate on your work.

can adjust labor costs

Fixed costs, such as personnel and system costs, continue to accrue even when a company’s profits decline. Since personnel costs account for a large proportion of expenses, it can be a factor in the red. By introducing BPO, it is possible to reduce costs because some labor costs can be treated as variable costs. Freeing up expenses through labor cost adjustments will allow you to develop more flexible business strategies and fund important projects.

In addition, hiring and training human resources with high expertise and skills requires costs. Outsourcing specialized operations through BPO eliminates the need to recruit and train personnel in-house, thus reducing such burdens.

Disadvantages of introducing BPO

BPO has both advantages and disadvantages. Let’s understand what kind of disadvantages are assumed by introduction.

Difficulty in accumulating business know-how

Since BPO outsources the work, it is difficult for the company to accumulate know-how.

Business know-how and knowledge are important intellectual property for a company. Even if you outsource specialized work and achieve high performance, if your own employees do not accumulate knowledge and experience, it will be a disadvantage in the long run. If you cannot share know-how within your own company, it will be difficult to secure a competitive advantage, which will lead to opportunity loss.

Furthermore, if you quit BPO, you will have to do all the work with your own employees. There is a risk that the previous method will not work when the work that has been outsourced for a certain period of time is to be done in-house again. In the case of work that was completely outsourced, the company does not have the personnel who can carry out the work, and it has to be done from system construction. If that happens, it is expected that a huge amount of time and money will be incurred.

In addition, lack of human resources and know-how can lead to business stagnation due to the inability to respond to unforeseen situations.

It becomes difficult to grasp the business situation

With BPO, there is a risk that it will be difficult to hand over work and grasp the situation .

When outsourcing work that was previously performed in-house, it is necessary to prepare for handover. In addition to the handover between the company and the subcontractor, it is also necessary to appropriately hand over the outsourced work between the company’s employees.

After the handover, hold in-depth meetings with the subcontractor regarding the work content, system, and frequency of progress reports, so that there is no discrepancy in understanding between the parties. It is important to have a system that allows us to accurately grasp the actual situation and progress of the work, and to build trust with the subcontractor.

If you do not understand the status of the work that your company has outsourced, you may not be able to respond when a problem occurs. It is not uncommon for system problems to become apparent after trouble has occurred. Check the details in advance about the measures taken by the subcontractor to prevent trouble and whether there is a work history.

There are security risks such as information leakage

In BPO, we may provide important information such as customer information, employee information, and financial information to contractors. Therefore, be aware of security risks such as information leakage .

If information is leaked from a subcontractor, it may affect your company. Depending on the extent and degree of damage, social responsibility may be questioned. If that happens, trust in the company will be lost, and it will have a huge negative impact on management. It is important to choose a company that has sufficient security measures in place.

Successful BPO implementation flow and key points

Appropriate in-house analysis and vendor analysis are important for successful BPO. Let’s understand the flow of desirable BPO introduction and the points to keep in mind.

[1. In-house analysis] Carefully select the work to be outsourced

When introducing BPO, it is important to identify the operations that should be outsourced. It is not enough to just outsource, but it is necessary to clarify the current issues related to the work and the purpose of outsourcing. Organize your company’s business and proceed with analysis and selection of outsourced work based on the following criteria.

• Is it a core business that leads to corporate profits?
• Is it your own business process?

It is unthinkable to cut out your own core business and outsource it. Non-core operations can be made more efficient through BPO. However, even if it is not currently core business, it is assumed that it will become core business later. Exclude the work that you want to accumulate know-how and make it your own service from the BPO target.

It is difficult to outsource processes that use methods unique to your company or outsource operations that you have strengths in, and you cannot expect the effects of outsourcing, so they are not covered.

Business suitable for BPO

There are four tasks that are suitable for BPO: general affairs, human resources, accounting, and marketing. Let’s take a look at the business content and benefits of each.

○Administration: Responding to visitors, receiving calls, creating and managing documents, managing equipment, collecting and delivering mail, planning and managing internal events, employee welfare, etc. In the general affairs department, BPO is suitable for office-based work
. It includes many tasks that are easy to standardize, such as document preparation and reception work, but it also plays many roles such as contacting and coordinating with each department. Significant efficiency improvement can be expected by collectively outsourcing each process.

○ Personnel: Labor management, employee recruitment (recruitment, interview, decision) and evaluation, payroll calculation, human resource development, etc.
By introducing BPO to the personnel department, you can utilize know-how and resources that you do not have in your company. If you outsource to a company that has strengths in recruiting and dispatching human resources, it will be easier to acquire the desired human resources, and you can also develop human resources using methods that your company does not have. It also reduces the cost of hiring staff.

○Accounting: Accounting data processing, issuing invoices to business partners, payment operations, budget management, accounts receivable/accounts payable management, etc. Like the general affairs department, the
accounting department includes many tasks that are easy to standardize. In particular, accounting processing tends to be complicated, and if you outsource it through BPO, you will not need to increase the number of personnel during busy periods, and you will be able to reduce costs. By entrusting the work to accounting specialists, it becomes easier to respond to revisions to systems and systems, and to prevent fraud by employees.

○Marketing: Customer management, market trend research, etc.
Not only office work such as general affairs and accounting, but also marketing can be converted to BPO. We identify current issues, present improvement plans, and provide operational support. By utilizing the know-how of a marketing specialist, you will be able to develop a more effective strategy than you would be able to do on your own.

[2. Vendor analysis] Determine the contractor to outsource

In BPO implementation, contractors have a great influence on their own operations. If you choose the wrong contractor, you risk unnecessary time and costs, so be careful. When choosing a contractor, let’s identify points such as matching with your company’s needs, speed of response, and level of security measures .

does it fit your needs

First, you need to make sure that the contractor is the right fit for your needs. Various companies provide BPO services, and each company has different areas of specialization and expertise.

No matter how good the performance is, it is meaningless if it is not related to the business you want to outsource. Choose a contractor that has a wealth of experience in the work you outsource and that matches your company’s business content.

It is necessary to check not only the achievements listed on the website, but also the speed and performance of the work. It is also effective to convey the details of the work when requesting an estimate and use the contractor’s response as a basis for making a decision. In addition, you must also examine the cost performance, support system, and whether it is a reliable supplier.

Additionally, make sure the contractor is appropriately sized. Larger businesses tend to have a wider range of services. In the future, it is recommended to choose a company that supports a wide range of operations in anticipation of the possibility of outsourcing a wider range of operations.

Is the response fast?

It is also essential to confirm the matching of business hours and the speed of response. Depending on the outsourcer, the hours and operations that can be handled differ, so it is necessary to select a contractor that can respond to the business hours of the company. In particular, when converting call center operations to BPO, check the details about how to handle holidays and nights.

The speed of response from the subcontractor has a great impact on the business. If you ask a vendor who is slow to respond, BPO will not progress and you will not be able to grasp the situation satisfactorily. In the event of trouble, a quicker response than in normal times is required.

Before introducing BPO, it is important to investigate the speed of the vendor’s response and response speed. Let’s choose a company that responds at an appropriate speed, judging from the estimate and response at the time of inquiry.

Are security measures perfect?

As mentioned above, BPO has security risks. In order to prevent damage such as information leakage, it is necessary to select a contractor with thorough security measures. Check the security measures and policies of the subcontractor, as well as the data storage and storage location. At the same time, it is important to establish strict rules for information handling and, depending on the situation, to set restrictions such as prohibition of subcontracting of confidential information.

In addition, the acquisition status of the following marks and certifications is also a selection criterion.

• Privacy Mark (evaluates businesses that handle personal information appropriately)
• ISMS Certification (Information Security Management System)

Make sure you do a thorough research before deciding whether or not you can entrust important information to a subcontractor.

[3. Operational analysis] Periodically measure effectiveness after introduction

After introducing BPO, it is necessary to periodically measure the effectiveness instead of leaving everything to a contractor. Let’s set KPIs (Key Performance Indicators) in advance, which are indicators necessary for measuring and managing performance.

It is important to make quantitative judgments by measuring the effects of BPO on your own. However, it is not always possible to achieve results immediately after introduction. In some cases, results can be obtained after a certain period of time has passed.

It is a good idea to set medium- to long-term goals for each task and check the achievement status. Let’s analyze and verify the effect according to the purpose, and make corrections and improvements as appropriate.

summary

BPO is a management method in which the company’s operations are collectively outsourced to an external company. In general, while outsourcing outsources part of the business, BPO allows you to outsource the business process itself. This makes it possible to strengthen the main business and adjust personnel expenses. On the other hand, be aware of the disadvantages such as the difficulty of grasping the business situation and the risk of information leakage.