A Quick Guide to Business Process Services

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“Jack of all trades, master of none”

It’s impossible for you to be an expert in every discipline related to your job.

The same holds true for most businesses. There may be many areas where your business is high in competency, but, especially for smaller organizations, there will likely be areas where you don’t have the skills or resources to be as competent.

You might decide to outsource some business processes to another organization, perhaps one with specialist skills or wider resources. However, the high costs don’t make economic sense if you only need help with occasional projects.

Businesses can get the best of both worlds by keeping their own specialized services in-house and outsourcing more general activities—or by outsourcing one-off projects to a company with particular expertise.

In both cases, business process services (BPS) or business process outsourcing (BPO) can help. But what do these terms actually mean? And how can they help your business operations be more efficient and productive?

What are business process services?

outsourcing

Business process services are those roles, tasks, or services that an organization outsources to another organization that specializes in those areas. This may happen when a company lacks the resources or skills to fulfil those roles to the standard they want. Good task management software may help with some issues, but you may want to outsource others. 

For example, an ecommerce firm may be experiencing a high volume of customer service calls but doesn’t want to break the bank on a contact center. In this case, outsourcing makes sense. 

Things like RPA (robotic process automation) have drastically changed many of the systems we use to do business, and BPS providers will specialize in these processes. 

To keep with this original example of BPO/BPS services, it helps to consider just how much a company would have to spend to provide call center services in-house:

  • A help desk or ticketing system can cost between $150 and $300 a month for each seat. 
  • Email and live chat solutions can cost around $30 to $50 a month per seat.
  • CRM and order management system solutions can cost about $150 a month per seat.
  • Your average in-house call center expenses can be around $141,284 a year.

When you consider these costs, and also think about things like initial expenditure on equipment, office space, training, etc., you can see why many businesses choose to outsource this aspect of their work. 

The third party organization who takes on these roles is usually one that focuses solely on the skills required. So, using the example given, this would be a company who focuses only on providing customer support responsibilities. 

The major advantage of outsourcing certain roles is that it also allows the original organization to focus on their core competencies and skills. They can grow their business faster and achieve business outcomes quicker, as they are not diverting sizable chunks of their budget to covering those outsourced tasks.

Are BPS and BPO the same?

bps and bpo

Well, yes and no. The BPO sector was mainly known for providing call center services, and providers were usually based in countries where salaries were lower, such as India and the Philippines. But, as business and technology have evolved, so has the BPO services industry to meet the changing demands of businesses worldwide. This covers everything from tech support to cloud services. 

This evolution has led to many BPO organizations now becoming BPS companies, or business process as a service (BPaaS) providers. This recognizes the far broader needs modern businesses have, and now covers many services that have an effect on productivity and efficiency. 

These ‘new’ outsourcing companies are now major service provider entities who not only provide a defined service, but can also offer organizations advice and insights on how to do things better. They can also help to deliver more positive customer experiences through advanced methodologies and practices. 

Where BPOs may have been seen as providing fairly ‘basic’ services such as cell centers, HR, and even some financial aspects, BPS service companies now provide higher end and bespoke services for organizations around the world. 

New tech and tools have played a big part in this evolution. Things such as AI (artificial intelligence), intelligent automation, advanced and real time analytics, digitization of many work processes, omnichannel approaches, and more, for instance. As the way you do business has rapidly changed, so has the role of outsourcing. 

BPS can not only help improve efficiency and productivity but can also help with organizational priorities. But these are not ‘one size fits all’ solutions. BPS companies recognize that needs of businesses can vary greatly, as can budgets and company cultures. For these reasons, BPS organizations offer bespoke and customized solutions that meet their clients’ needs. 

Many BPS services are now centered around automation, something that can not only offer considerable financial savings, but can also reduce the level of human error and speed up the relevant processes.Looking at how big this market now is gives some idea of its ever increasing importance. In 2020, the global BPO/BPS market was worth around $232.32 billion.

What are the benefits of business process services?

business process services

Of course, before you make any business-related or strategic decision, you look at the pros and cons of that decision. So what are the advantages, and disadvantages, of making the move to outsourcing some of your tasks?

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Advantages 

1. Costs

Perhaps the most obvious benefit. Outsourcing can be a major differentiator and offer significant cost savings which will have a major effect on your bottom line. While this may be especially true for small businesses or startups, it can also apply to larger organizations where they seek to streamline by outsourcing one or more specialist services.

2. Improved results

BPS providers are experts in the services they provide. They know how to fill the needed roles and they have the necessary skills, equipment, and knowledge of industry trends and best practices. Outsourcing particular services means that you are usually getting the best services available, something that benefits your clients as well as you. 

3. Focus

By outsourcing certain parts of your business processes, it allows you as a business to focus on your core skills, workflows, and competencies. Again, this can be especially important to startups and smaller businesses who want to concentrate on growth and optimization in their initial stages. The outsourced services can often be a distraction to that focus if kept in-house. 

4. Flexibility

Your company may experience seasonal fluctuations that mean some busy and some quiet periods for your business. You know how troublesome it can be to adapt to those changes and to scale up—or down—according to your needs. 

Your BPS provider offers greater flexibility and scalability to meet all your needs. They will have trained staff able to fill any gaps and the technology solutions to support increased needs.

5. Improvements

BPS providers are now high level experts in their fields. Not only can they provide a service, they can advise you on how those services best suit your business model. This means that you can dramatically reduce errors and, with a good SLA (service level agreement) in place, the work is done accurately and swiftly.

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Need to systemize your business and make growth easy?

Disadvantages 

Of course, there are two sides to every coin. So if you are considering outsourcing, it helps to know the potential drawbacks so that you can plan around them and find solutions. 

1. Security 

Security is paramount to how we do business. We want to protect our customers’ data as well as our own, sometimes proprietary, information. Ensuring your BPS provider has adequate security measures in place is crucial if they will be handling any type of sensitive data. 

2. Costs 

costs

While saving money is a major benefit, if your company becomes too dependent on your BPS provider over a long period of time, you may find that costs could rise significantly when it comes to renewing your contract with them. This may leave you in a Catch 22 situation of either accepting the new costs or putting time and money into finding a new provider. 

3. Communications 

Many BPS providers have their centers located overseas (offshoring). While the leading countries providing such services rank fairly well in English proficiency, India at 50th out of 100 countries and the Philippines 27th, problems with communications can still arise. If not addressed in initial negotiations, this could be a costly problem in the long term.

Types of BPS

BPS has come a long way from the early days of BPO. The services offered are far more diverse and complex, and the choice of providers is far more varied. So how do we separate the different types and categories?

Categories

1. Back office outsourcing 

Back office services refer to those aspects of business which are absolute necessities for your business to operate. That can include things such as payroll, human resources, invoicing, etc. You may choose to outsource these tasks partially or in their entirety. 

2. Front office outsourcing

Front office tasks most commonly refer to parts of your business that involve some sort of customer service. That can include traditional customer support services but also other customer related tasks such as marketing services or technical support. 

Types

It’s a common assumption that if you’re outsourcing tasks to a third party provider, then it means that provider is located in a different country. In fact, there are three main types of BPS which can vary in location according to a number of factors.

 

1. Offshoring 

offshore company

Offshoring is nothing new. Many manufacturing companies outsource work to other countries to take advantage of low labor costs and cheaper materials. With BPO, it was call centers that took center stage for the same reasons. 

2. Onshoring 

As the name may suggest, onshoring is when you outsource services to a provider located in your own country. Again, this is nothing new, and a good example is when a retailer outsources its logistics services to another company. Many businesses will look to onshore certain services to ensure aspects of the service, such as security or communications, meet their standards. 

3. Nearshoring 

Nearshoring is when you outsource roles to another country but one that is geographically close or adjacent. An example of this would be US companies outsourcing some services to providers in Mexico. Depending on the service provided, this can offer the advantage of lower labor costs but without prohibitive import or logistics costs.

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Need to systemize your business and make growth easy?

Examples of business process services

Whereas BPO service delivery generally involved more basic processes and tasks, BPS now encompasses almost every area of your business if needed.

  1. Manufacturing. This can involve any or all steps in the manufacturing process and supply chain, from engineering to procurement or quality control. It can also involve more than one country in some cases. Some automotive manufacturers now have parts made in several locations with final assembly at a central plant. 
  2. Finance. Processes from invoicing customers to risk management or payroll. 
  3. Healthcare and life science. Such companies may outsource different aspects of their business from manufacturing through to clinical trials and approval processes. 
  4. Banking. There is continued and projected growth of offshoring by banking and financial services companies. While this was traditionally call centers, those outsourced services are expanding to include things like document management, credit checks, and risk assessment as many institutions seek to digitize their global footprint. 
  5. Travel. In this era of digital transformation, it is no longer necessary for companies to use a ‘local’ travel agent. So the processes of organizing travel, accommodation, etc. for staff can be outsourced to specialists. 
  6. Marketing. Our marketplace is now mostly global and digital. Omnichannel approaches, increased use of social media, and more means our marketing staff and teams can now be based anywhere with an internet connection. 

Challenges of outsourcing business process

The main challenge is finding a suitable partner to whom you can outsource processes with confidence. You need to overcome any concerns about loss of quality control, which means choosing a reputable provider—and making sure there’s a direct correlation between your requirements and their actions. 

It’s also important to ensure that everyone has a clear understanding of what’s being outsourced and why, as well as deadlines for work to be completed. Otherwise you may have unrealistic expectations, and your team might overlap with the activities assigned to your provider. 

You may be planning to outsource occasional projects such as marketing or product launches, or regularly outsource processes in finance or HR. Either way, it’s crucial to agree how you’ll manage this activity before you go ahead with any outsourcing. It will then be much easier to identify tasks and measure progress. 

Using business process management software such as Process Bliss will help you centralize and standardize your own policies and processes. You can ensure you’re only outsourcing things that really need to be outsourced, and keep a close eye on what’s being achieved. This will significantly improve the return on your outsourcing investment.

The takeaway

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Outsourcing is not a decision to be taken lightly. While it offers many benefits, there are also potential pitfalls to be aware of. Spend some time looking at your needs and what different providers offer, research their history, and read relevant white papers on the subject. 

There are also many case studies available online. These may be case studies specific to your business type or one that takes a general look at the subject. It helps to undertake a process mapping exercise, too, to identify your needs and what benefits outsourcing may offer. Then, you can embark on potential BPS outsourcing—or choose not to—with confidence. 

Remember you can use process management software like Process Bliss to streamline your own processes and decide how you’ll manage outsourced activity, before you head down the outsourcing route.

Author , Commercial Director at Process Bliss

Steve Mace has decades of experience in senior management positions at global technology companies, and has seen firsthand what can happen when process goes wrong. A firm believer that for a business to succeed empowerment, autonomy and creativity are vital to company culture.

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