10 Common BPO Mistakes Businesses Should Avoid

Businesses can delegate their tasks to third-party services to focus more on their core activities, which is known as business process outsourcing. There are several benefits a business can get from it. But some businesses often make some key mistakes for which their outsourcing activities may not return expected results.

These mistakes include choosing a provider with the lowest rate, overlooking the risks of outsourcing core activities, and establishing a partnership without a strong service level agreement. In this blog, we are going to discuss 10 common mistakes businesses should avoid when outsourcing their business activities.

Key Takeaways

• An outsourcing partner can give you the best output when you establish clear expectations for them.
• A business shouldn’t choose a BPO provider solely based on cost because the provider with the lowest cost can fail to deliver quality work.
• Be careful when outsourcing core business functions because some operations are meant to be handled with an in-house team.
• Cultural differences can create customer service and communication issues, so you shouldn’t ignore them when outsourcing your tasks to a BPO service.
• A service level agreement is essential to get the best output from your provider, so you must create a strong agreement.
  Technology and automation ensure accuracy and efficiency in business operations, so you should assess how your partner uses them in handling various activities.
• Don’t ignore the feedback of your in-house employees and business partners because they provide many useful insights about your workflow.
• Never skip the assessment or interview process for choosing a partner because it is essential to understand how they match with your budget and business goals.
• Always check how a provider protects the data privacy of their clients and how they ensure adherence to specific regulations applicable to your industry.
• Tracking and measuring the performance of your provider is essential to ensure that they follow the expected standards or service level agreement in delivering tasks.

10 Most Common BPO Mistakes

Most of the mistakes businesses make when starting a relationship with their BPO provider occur from making decisions too fast and without careful consideration. Here, we will explore 10 mistakes like that:

1. Outsourcing Tasks Without Setting Clear Expectations

A BPO service may fail to achieve your satisfaction if they are not clear about your expectations. They may handle their tasks, but you will see no impact of it in your business. This can create frustration for both parties.

How to avoid it:

Set some of your core objectives and then establish clear expectations based on them. Communicate with your providers about your specific needs and how you will evaluate their performance in achieving those.

For example, let’s say your objective is to increase customer retention and deliver better customer service. This is how you should set your expectations for your partner:

• Respond to customer queries or requests as soon as possible
• Resolve 90% of issues on first contact.
• Maintain a customer satisfaction score (CSAT) of 90% or above.
• Increase customer retention by 5% or above.

When you set clear expectations, your BPO provider understands what you want and they can stay free from any confusion. Without having any clear expectations, they can still put in significant effort in handling customers but may not yield any positive results for your business.

2. Selecting an Outsourcing Partner Solely Based on Cost

Cost reduction is one of the major reasons businesses consider outsourcing. But that doesn’t mean you have to select a provider who offers you the cheapest rate. Remember that high-quality work usually can’t be expected from such a provider. The cost of choosing a low-cost outsourcing provider can be much higher if the service they deliver impacts your brand reputation or leads to compliance issues.

How to avoid it:

When selecting a partner, you should take cost into consideration but also ask for a case study, testimonial, or work sample. It will help you to understand the quality of their work and reputation as a BPO service provider.

3. Neglecting the Risk of Outsourcing Core Business Functions

Businesses usually outsource repetitive and low-value tasks to focus more on high-value tasks. For example, a business can outsource CRM data entry tasks to focus more on its core activities. Core business functions refer to the activities that establish the very basic foundation of a business and help it to remain profitable.

It is best to handle your core activities with an in-house team if outsourcing them can have a significant negative impact on your business. When a task is strongly related to your brand identity or revenue generation, you should carefully consider the risks of outsourcing it.

How to avoid it:

Keep an in-house team to handle the activities that are most important to your business. In this case, if you are running a product manufacturing business, then outsource tasks such as data entry, payroll processing and customer support. This can help you spend more time on product development or improving product quality.

4. Ignoring Cultural Differences in Business Relationships

Many businesses choose a BPO service provider outside their country or region to reduce labor costs. But they can face cultural challenges when they do so since people across the world don’t follow the same norms and behaviors. The way of communication and interactions can also vary across different cultures.

If your customers are based in Western countries and your customer service provider is based in Asia, then your clients may face some communication challenges. Asians like to be polite, humble and formal in their interactions. There are some phrases or expressions that your customer service team can misinterpret. These types of problems can lead to a poor customer experience.

How to avoid it:

To overcome cultural difference issues, you can have a prior discussion with a shortlisted BPO provider. Ask them how they are going to handle customers from a different region or country. Additionally, you can create some communication guidelines for them.

5. Failing to Establish a Proper Service Level Agreement

A service level agreement sets an expected level of standard in service between you and your provider and is typically included in a contract. It clearly defines the responsibilities of each party in the relationship. A strong service level agreement should include some key details to ensure they deliver high-quality service, including the following:

• Service scope
• Service expectations, reliability and responsiveness
  Performance metrics
• Timeframe for issue resolution
• Reporting procedure
• Penalties for failing to meet the service expectations and guidelines

Without a service level agreement, you may not be able to hold your provider accountable for failing to meet the expected performance standards. As a result, you may notice inconsistent standards or low-quality services from them.

How to avoid it:

Establish clear expectations for your BPO service provider and create a strong service level agreement with the help of an expert before deciding to partner with an outsourcing service provider.

6. Ignoring Technology and Automation Capabilities

Technology and automation can help teams deliver tasks faster and with more accuracy. This is why you should review the work process of a BPO service provider and how they use technology to their advantage. A provider who heavily relies on manual processes can deliver tasks at a slower speed and with less accuracy than those with automated processes.

How to avoid it:

To know about the technology and automation capabilities of a provider, you can ask them a direct question. For example, if you are using a BPO service for administrative support, you can ask whether they use AI for email management. You can also conduct research about the work process of a provider by visiting their website or social media pages.

7. Ignoring Stakeholder and Partner Feedback

Business partners and employees from the in-house team can often provide valuable insights about your workflow and work standards. It is necessary to collect their feedback and insights before creating SOPs for the tasks that you need to outsource. Their feedback can also help you set realistic expectations and delivery timelines for your outsourcing partner. So ignoring their feedback may lead to revisions of your SOPs or even changes to your agreement with the service provider.

How to avoid it:

Ask for open feedback about outsourcing particular tasks from your in-house employees and business partners. Identify the risks, challenges and problems that you can expect if you outsource tasks before agreeing with a service provider.

8. Skipping the Interview Process Before Choosing a Provider

There are many BPO service providers in the global market. Choosing the right one can be overwhelming for any business and sometimes conducting research or reviewing case studies and testimonials may not help you select the right partner.

This is why you should always have an interview process for selecting the right partner for your business. Before the interview process, you need to clearly define your budget, goals and list of tasks that you want to outsource. The partnership with a BPO may not lead to positive results when you skip this step because you can often make poor decisions when only focusing on your budget or referral.

How to avoid it:

Create a shortlist of BPO providers and book a meeting with their key decision-makers before deciding which one is best for your business. Here are some questions you can ask them during the interview:

• What is your client or account management process?
• Do you keep a visible dashboard for clients where they can see their tasks with status on progress?
• How do you handle data privacy and security of your clients?
• What is the process of recruiting and training employees who will handle my tasks?
• What do you know about our company’s culture and mission, and how would you manage the cultural differences with our company?
• Can you share any specific case study or example of helping one of your clients with their business goals?

9. Overlooking Data Security and Compliance Issues

It might be necessary to share sensitive information about your business and customers when outsourcing your work. When your BPO service provider can’t manage the security and privacy of that data, it can create compliance issues for your business. In those types of cases, you can’t simply avoid your responsibilities just because a third party was handling your data.

How to avoid it:

It is not wise to rely on a BPO service if they say that your data will be safe with them. There are some practices you can follow to minimize data security and compliance risks, such as signing a non-disclosure agreement with your provider. It will ensure that they will not share your customer information, financial records, or other confidential information with others.

At the same time, you should check their certification and the standards they follow to ensure data privacy and security, especially those that are applicable to your industry. For example, if you are running a business in healthcare, then you should ensure the provider is HIPAA compliant. Also, you need to ask them about their risk management practices, such as end-to-end encryption and cybersecurity systems.

10. Failing to Track and Measure BPO Provider Performance

Outsourcing your tasks can help you reduce costs and improve efficiency in handling tasks. But if you only care about getting your tasks completed, then you may not get the actual benefits of using a BPO service. The work quality of a provider can fall below the expected standard, or you may notice delayed task completion, which can impact your business results.

How to avoid it:

You must regularly monitor your BPO provider’s output against your SLAs. This helps ensure consistent and reliable performance. For example, if you are outsourcing data entry tasks, you track the error rate, which means the number of records that are inaccurate.

When you are outsourcing your customer service tasks, you can measure the customer satisfaction score (CSAT). At the same time, you should measure the average handling time (AHT) for customer interactions.

Final Thoughts

It is necessary to have good preparation before you decide to outsource your business tasks. Many businesses select a partner too quickly and later get disappointed by their performance. So you should avoid that by setting clear expectations, drafting a service level agreement and collecting feedback from your stakeholders.

At the same time, you should be very strict with tracking and measuring the performance of your provider. Remember that successful outsourcing depends a lot on avoiding the major mistakes before starting the outsourcing process.

Frequently Asked Questions

What are the biggest mistakes in BPO?

Some of the biggest mistakes in choosing an outsourcing provider are not setting clear expectations, not having a strong service level agreement, selecting a partner solely based on cost and failing to track and measure a provider’s performance.

How do I choose the right BPO provider?

Set clear expectations, business goals and measurable outcomes that you want to achieve from outsourcing business functions. Select a list of providers based on budget and then interview the providers to understand which suits your business.

Should core functions be outsourced?

Businesses usually outsource non-core activities so that they can focus more on their core tasks. It is not that you can’t outsource core functions, but some tasks are best handled with an in-house team. It is because outsourcing a core activity such as manufacturing can sometimes negatively impact your brand image.

What KPIs to track in BPO?

Some of the KPIs you can track to measure the performance of your BPO provider include accuracy rate, turnaround time (TAT), average handling time (AHT), customer satisfaction score (CSAT) and first contact resolution (FCR).