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

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Most businesses want to improve in every aspect of their operations especially customer service, the direct interaction with customers who are the soul of every business. There is a constant rise in competition in the global economy and high demand for improved customer services. Outsourcing is a business practice that involves hiring a third-party outside the company to perform specific operations; it gives an added advantage in improving customer services and general company growth.

Business Process Outsourcing quality service providers would give various benefits like immediate access to experts, uninterrupted customer service, cost-cutting, and cost-efficiency. Knowing all this, the role of BPOs cannot be overemphasized and cannot be underestimated, as important as they are they also come with associated risks that need to be minimized. This article is focused on helping 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 and quality of service expected from them and an already established cost for their services. If this contract is upheld and there is no breach, every operation would run smoothly and the problem arises when either the BPO or your organization breach agreed terms, this would lead to a drop in the quality of services, unstable operations, could also lead to the drop in revenue that results from the drop in customer services and inefficiency.

When the partnership with hired BPO becomes unhealthy and things fall apart, it dents the integrity of your brand name and general operations, understanding the risks to be faced only helps companies to plan. It is usually difficult for companies to differentiate high-quality BPOs that understands 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 major risk in hiring a BPO. Hiring a BPO can lock you out of our operations and 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, then ultimately affects company revenue and integrity.

To mitigate this risk, the relationship with BPO should be managed solely by your company, improve communication between BPO and company, and pay close attention to general operations both in-house and outsource.

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 of 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 and even with confidential agreements to give the company an edge legally and serve as a way to reduce this risk, it is usually not enough and 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 in place together with other measures like resisting the urge to give as much information to the BPO. Make a list of information that is needed by the BPO for a particular purpose, this would help regulate the amount of information given out. Also, frequent security audits would keep the BPO in check.

Trustworthiness

When hiring a BPO, companies lookout to have a partnership with a BPO that is built on trust. High quality and trustworthy BPOs would deliver security, quality, and reliable services and trust. To be sure of 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 partnership is expected to be stable. However, after hiring a BPO, they can switch upon you and every agreement goes sideways, this poses a great 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, and 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, eventually, this might lead to fluctuation in productivity.

Mitigating this risk would involve the company to hire BPO that can offer services that are not offered by the company yet 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 great risk that might be faced by the company. 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 regulations, make sure they get familiar with the regulations and they carry out operations accordingly.

Loss of Business Knowledge

The risk of losing business knowledge is common for offshore BPOs, moving company operations offshore might lead to loss of control and supervision over company operations and might affect the level of performance. To reduce this risk is to have a large supervision network of operations both in-house on home soil and offshore operations of the company, this way you have full control of company operations and up-to-date knowledge of company business.

Hiring BPOs is effective and comes with great benefits, companies just need to understand the associated risk and how to mitigate them.

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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