Home Job Interviews & Career Tips Business Process Outsourcing – The Advantages and Disadvantages

Business Process Outsourcing – The Advantages and Disadvantages

by Ogbeifun Daniel

Business Process Outsourcing (BPO for short) is the contracting of internal business processes to an outsider, a third party provider, who is often times an expert. The most common business processes that are often outsourced are:

  • IT jobs
  • Legal issues
  • Content Development
  • Web Design and Maintenance
  • Recruitment
  • Logistics
  • Manufacturing
  • Technical / Customer Support
  • accounting and customer/call centre relations

Sometimes an organisation cannot handle all internal processes, or doesn’t want to give it to the in-house employees being that it’s a temporary situation. In such instances, the alternative is to call in an expert who will pick up the task of tidying things up and maintaining the organisations responsibilities.

Why Is Business Process Outsourcing Becoming Even More Popular Today?

Business process outsourcing has being on a noticeable rise and there are a good number of reasons for this. Some of them are:

  • Shortage of experts and specialists in some aspects of the business processes
  • Availability of cheaper and quality labour
  • Ability and feasibility to concentrate on other important business processes

The reasons above and aforementioned factors are responsible for the steady increment in business process outsourcing worldwide. While BPO is continually being inculcated by both start-ups and multinationals, it is wise to have a look at the pros and cons before giving it the leap.

The Pros of Business Process Outsourcing

The following are some advantages of BPO really worth examining.

  • Expertise and Efficiency

This is one obvious advantage of business process outsourcing. The contracting firm sources out professionals and experts in the chosen field that are far superior to their inner employees in skills thus providing the needed expertise to getting the job done. This ensures swiftness and speed which increases efficiency all the way round.

  • Gives room for concentrating on internal business

Outsourcing takes away the stress of nagging over difficult tasks that cannot be handled efficiently by the inner staff of the firm, thus giving room for the organisation to concentrate more on core internal issues.

  • Eliminates recruitment costs

This is a solid pro of business process outsourcing; cutting off or reducing the cost of employing a new staff. Being that it’s a one time job, recruiting for just that purpose would cut into the pocket of the firm, but outsourcing saves expenses for the company.

The Cons of Business Process Outsourcing

While the advantages of BPO are sure appetizing, it will be also proper to look into the disadvantages that hiring of an outsider brings.

  • Risks of confidential information getting exposed

This is surely definitely the most pronounced risk with business process outsourcing. The contracting firm risks losing or exposing some confidential data and information.

  • Epileptic delivery timetable

This happens if the contracted expert turns out not to be as good as expected. Meaning, the delivery timetable ends up getting stretched resulting, in most cases, in loss of contract deals and costing the firm additional expenses, and even the reputation of the firm.

  • Lack of focus

If the outsourced expert is very good and is catering for several contracting firms at the same time, focused could get digressed. While on the job, his attention might end up divided thus prolonging the time needed to deliver the job and invariably costing the firm.

In conclusion, before outsourcing business processes, every firm should really consider the obvious advantages as well as the disadvantages, and also lay out to the vendor the exact details of what is being demanded.

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