Published On: September 2nd, 2020 / Categories: Outsourcing / Tags: /

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Asides from aiming at success in business operations, many businesses also focuses on customer success. Like the saying goes ” customers are the soul of every business” therefore there is a need to always treat them right.

There is a constant rise in competition in the global economy and high demand for quality customer services. Outsourcing is a business practice that involves hiring a third-party outside the company to perform specific operations; this helps to improve customer services and overall company growth.

Business Process Outsource service providers offers various benefits like immediate access to experts, constant customer service and cost-efficiency. Knowing the role of BPOs allows you to adequately plan for and hire the best hands.

As important as they are, they also come with risks that need to be cut to the minimum. This article is seeks to help organizations understand the risk they might face in hiring BPOs and how to mitigate them.

Hiring BPOs includes having a mutual agreement like a contract that includes the standards, quality and cost of services. If both parties upholds their parts of the contract, then there is no cause for alarm.

On the other hand, if there’s a breach of contract from either of the parties, then problems may arise. A breach may lead to a drop in the quality of services, unstable operations, and the decline in revenue. Ultimately, poor customer service may also creep in.

When the partnership with BPO becomes unhealthy, and things fall apart, it dents the integrity of your brand name and general operations. Understanding the risks only helps companies plan ahead.

It is usually tricky for companies to differentiate high-quality BPOs that appreciates quality and being proactive from BPOs that offer less performance. The risks associated with hiring BPOs are Strategic and Operational.

The Following Are Risks Associated With Outsourcing BPOs And How To Mitigate The Risks :

Loss of Control

Loss of control is an operational risk; it is a significant risk in hiring a BPO. Hiring a BPO can lock you out of operations. Then, you experience loss of control and visibility, this would lead to a lack of communication with the BPO, lack of control over the type of services rendered, and this may result in less desirable services or products delivered to customers, ultimately affecting the company revenue and integrity.

To mitigate this risk, the company needs to manage the relationship with the BPO and improve communication.

Security Risks

The security risk is one major fear of companies when hiring a BPO. Company security includes company database, intellectual properties, and privacy requirements.

Collaborations with BPOs would mean that there would be sharing proprietary company information. This information can be company intellectual properties like protocols, papers, applications, customer database information like financial data, login details, card details, billing information, etc.

However, there can be security breaches and data leaks, which would not be pretty for the company. Hiring a BPO leaves the company’s data vulnerable.

Even a confidential agreement that gives the company an edge legally and serves as a way to reduce this risk is usually not enough. Companies should be able to take precautions and total control over information shared with BPO.

To properly mitigate this risk, legal measures should be put together with other means, like resisting the urge to give as much information to the BPO. Make a list of information the BPO needs for a particular purpose; this would help regulate the amount of information given out. Also, frequent security audits would keep the BPO in check.


When hiring a BPO, companies lookout to have a partnership with a BPO built on trust, and high quality. Trustworthy BPOs will deliver security, quality, and reliable services.

In order to be sure you are hiring a trustworthy BPO, you should carefully assess their credentials and capabilities.

Stable Partnership

Hiring a BPO is building a partnership, either long-term or short-term, and every business is expected to be stable. However, after hiring a BPO, they can switch upon you, and every agreement goes sideways, this poses a significant threat to the company.

To mitigate this risk, you need to evaluate your BPO, know their outsourcing model, is it fixed or flexible, and identify their team structure. This information would help you predict how stable the partnership would be.

Fluctuation in Productivity

Hiring a high-quality BPO can still pose risks of fluctuation in productivity; this can be because most times hiring a BPO would mean there would be layoffs within the company and could affect the morale of other in-house staff and eventually, this might lead to fluctuation in productivity.

Mitigating this risk would involve the company to hire BPO that can offer services that the company cannot deliver itself and also hiring a BPO that would not overstretch the finances of the company.

Compliance with Company and Government Regulations

When hiring BPOs, oversight of the company, and government regulations is a considerable risk that the company might have to deal with. BPOs are usually not familiar with company regulations that affect them, and if the BPO is from a foreign country, they might be ignorant of government regulations too. To prevent the BPO from flouting rules, make sure they get familiar with the rules, and carry out operations accordingly.

Loss of Business Knowledge

The risk of losing business knowledge is common to offshore BPOs; moving company operations offshore may lead to loss of control and supervision over company operations and may affect performance.

To reduce this risk is to have an extensive supervision network of both in-house and offshore activities of the company. This way, you have full control of company operations and up-to-date knowledge of company business.

Data entry firms thrive on information they have about the customers they’re selling their goods and services. Therefore, it is essential to put processes or standards in place to ensure that your firm has access to accurate and updated customer data.

Hiring BPOs is effective and comes with great benefits, and companies need to understand the associated risk and how to mitigate them to improve general business operations and processes.

Joydeep SinghaGrowth Expert
Founder at AskDataEntry – India’s leading online virtual administration services provider for businesses and individuals. He is a seasoned marketing professional who is an expert in digital marketing and entrepreneurship.

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