Outsourcing is surrounded by misconceptions. Dispelling these is crucial for businesses to make informed decisions about outsourcing and to fully leverage its many potential benefits.
Clinton Cohen, CEO of iContact BPO debunks 10 of the most common outsourcing myths, demonstrating what stands between businesses staying in an operational rut and winning a serious competitive edge.
Myth #1: Outsourcing is the same as Offshoring is the same as BPO
The terms ‘outsourcing’, ‘offshoring’ and ‘BPO’ are often used interchangeably, yet these concepts differ in significant ways.
Outsourcing: This is the practice of contracting non-core business operations to a third-party entity, whether it’s a local (onshore) or a foreign (offshore) company. Outsourcing doesn’t necessarily mean offshoring. The location choice depends on various factors, including cost, expertise, and convenience.
Offshoring: While offshoring shares similarities with outsourcing, it occurs in a different country from the country (or countries) where the company receiving the services is located. Offshore employees can be employed by the company or by a separate third-party offshore entity. Offshoring is typically done to leverage labor cost advantages in developing economies, regardless of the hiring structure, but may also serve to access additional skilled labor or establish a business presence in a foreign country.
Business Process Outsourcing (BPO): This is a form of outsourcing and covers various functions such as recruitment services, human resources, financial management and sales. Back office BPO refers to the outsourcing of core business support operations such as accounting, payment processing, IT services, etc., while Front office BPO refers to the outsourcing of customer-related services such as technical and sales support or CX.
Myth #2: Outsourcing only saves costs by cutting corners
While cost reduction can be a significant benefit, reputable outsourcing providers focus on quality, efficiency, and value addition. Many companies also outsource to access specialized skills, advanced technology, and innovation that they don’t have in-house.
There would be no real business benefit if costs were cut and service levels also dropped – the formula only has positive effects if lower costs are combined with KPI-driven service levels and performance and process improvements.
Outsourcing can help mitigate risks related to market fluctuations, regulatory changes, and operational disruptions by distributing responsibilities across multiple entities.
Myth # 3: Outsourcing leads to job losses
While outsourcing can shift some jobs, it can also create opportunities. It allows companies to focus on core competencies, potentially leading to business growth, the creation of new roles and career-progression for in-house staff (who are able to better focus on their core roles).
Furthermore, outsourcing is a solution for countries that face significant skills shortages. In the US – and many other developed markets – finding skilled people to work in contact centers and most customer service roles is massively challenging.
This is one of the key reasons why South Africa is the top preferred outsourcing destination for the US, as it offers a deep pool of labor and great talent for rapid scale as and when needed.
South Africa is also known for good English proficiency and established communications infrastructure.
Myth #4: Only large companies benefit from outsourcing
Preconceived ideas of outsourcing falling solely within the grasp of corporate behemoths are old-school, thanks to a new breed of niche BPO partners working in specialized markets. They are willing and able to work with small and medium-sized businesses (SMBs).
SMBs can significantly benefit from outsourcing, which can bring a serious competitive edge via access to expertise and resources that would otherwise be unaffordable.
When done well and in partnership with the right BPO provider, outsourcing brings significant benefits to SMBs in terms of better and newer technology, process enhancements, quality management, workforce flexibility, access to specialized people skills, economies of scale, multi-channel customer service channels and superior customer experiences.
Myth #5: Outsourcing results in poor quality work
This is a common misconception. With proper planning, training, and onboarding practices in place, along with KPIs, there’s every reason for quality to remain high – and even improve.
According to Deloitte’s 2021 Global Shared Services and Outsourcing Survey, 80% of respondents expressed satisfaction with their outsourcing arrangements.
Furthermore, BPO providers typically offer specialized services in areas like customer support.
This specialised expertise – say, when it comes to resolving customer issues faster en route to customer satisfaction – can result in higher quality and efficiency than could be achieved in-house. Many providers maintain incredibly high standards and follow stringent quality control processes to ensure excellent outcomes.
Myth #6: Outsourcing means introducing language and cultural barriers
Concerns regarding language and culture often arise when outsourcing to an offshore company.
However, modern outsourcing providers are proficient in English as they have a diverse clientele, particularly from North America, Australia, and Europe.
In addition, many outsourcing companies have multilingual staff to facilitate effective communication based on client-specific needs. This fosters seamless collaboration with clients, regardless of their culture and language.
One of the reasons South African BPO providers perform so well in North American markets is that the accent – although not American – has a strong British influence and is clear and easily understood.
Furthermore, when it comes to customer experience and cultivating a culture of empathy, South Africa’s call centre agents are comparatively advanced.
There is also an easy cultural fit with certain figures of speech, euphemisms and terminologies used in the US, Europe, the UK and Australia.
Myth #7: Outsourcing means losing control over business processes
Like an in-house team, the role of an outsourcing provider is to carry out the assigned tasks according to an agreed performance agreement. You retain control over all the decision-making aspects but without being burdened by minor details of the process.
Companies can stay closely involved with their outsourcing partners, thanks to control and oversight via well-defined contracts, performance metrics, and regular monitoring and quality assurance on both teams.
With strategic outsourcing arrangements, businesses get the scale and skills they need, on a lean and cost-effective basis.
In many respects, therefore, outsourcing offers better control as in-house people are relieved of non-core activities to focus on what matters most to the business.
Myth # 8: Outsourcing is only for non-core activities
While many companies start by outsourcing non-core activities, there are cases where strategic core activities are outsourced to leverage external expertise and innovation. One such area is CX outsourcing – and there is no disputing that CX sits at the heart and core of every business.
One of the key drivers of CX outsourcing is the rapid digitization of business and service processes, with more businesses serving multinational markets.
Keeping up with an always connected, ‘always on’ customer requires a 24/7, multichannel service and support operation, but very few businesses are geared for the scale of human resources, technology and security requirements to deliver on their changing customer service requirements.
Cost may be a consideration, but the reality is that brands need to double down on their support offerings and ensure consistent, on-brand, and effective customer service experiences in every interaction. Handling this level of service in-house is a tall order, hence the take-up of specialist outsourced CX providers.
Myth #9: Outsourcing can increase data security risks
Data security risks can be mitigated with sound security measures, including data encryption, compliance with regulations, and thorough vetting of outsourcing partners.
Remember, too, that protecting data and IP is a priority for outsourcing companies, as their professional reputation hinges on client confidence.
Work with an outsourcing partner that ensures the highest levels of compliance with secure data handling procedures and that has robust tech infrastructure and resilient contingencies. These may include cloud-based, on-demand data centres, power back-up solutions and disaster recovery programmes.
Myth #10: Different time zones can affect productivity
Professional outsourcing companies strategically manage time zone differences for strategic advantage and, in many cases, larger time differences can be harnessed for increased productivity.
Businesses with multinational footprints can establish a 24-hour cycle of productivity by working across different time zones and maximizing their working hours. In this way, combining domestic outsourcing with offshoring can be a highly cost-effective way to deliver round the clock services to customers around the world.
Don’t let preconceived notions and old-school myths about outsourcing hold you back. Outsourcing allows businesses of all sizes and industries to streamline operations, reduce costs, access specialised skills, and maintain a competitive edge in the fast-paced and uncertain world.