Let’s face it – running a successful business these days is tougher than ever. Between global competition, new technologies, regulations, and customer expectations, companies have a lot on their plate. Leaders are constantly looking for ways to reduce costs, boost efficiency, and focus on their core strengths.

Many have turned to outsourcing back office and support functions as a solution. Customer service, tech support, HR, accounting – you name it, companies are handing it off to specialized third-party providers. This approach is known as business process outsourcing or BPO.

On the surface, BPO seems like a slam dunk. Lower costs! Better focus! What’s not to love? Well, turns out there can be some serious downsides for customer experience. Brands have spent years cultivating relationships and loyalty with customers. When outsiders enter the mix, things can get messy.

In this post, we’ll break down the customer experience implications of BPO and how you can avoid the pitfalls. We’ll look at what BPO is, benefits vs risks, key factors impacting CX, and strategies to maintain quality despite outsourcing. Time to dive in!

What Exactly is Business Process Outsourcing?

First, what do we mean by business process outsourcing? BPO is when a company hands off execution of specific business functions or processes to a third-party provider. We’re talking non-core back office type stuff here – the nuts and bolts work that keeps operations humming.

Some examples of commonly outsourced business processes:

• Customer service & support -answering questions, resolving complaints, handling returns/warranties
• HR activities – payroll, benefits admin, background checks, recruiting
• Accounting – accounts payable/receivable, expense reporting, auditing
• Supply chain management – manufacturing, inventory, logistics
• IT services – application management, infrastructure, security
• Marketing – market research, content creation, social media

Basically any process that isn’t mission critical to a company’s competitive edge is a candidate for outsourcing. BPO enables focusing resources on core revenue-driving business activities.

Outsourced services may be located domestically or offshore in places like India and Philippines where labor costs are cheaper. The global BPO market is booming – valued at over $200 billion currently and expected to reach $400 billion by 2027!

Top players include Accenture, Genpact, IBM, and Wipro. These providers leverage specialized expertise, resources and technology to deliver BPO services across industries more efficiently than clients could in-house.

Now let’s look at why companies find BPO so appealing.

Benefits of BPO for Companies

There are a number of compelling benefits that make business process outsourcing an attractive strategy for many companies:

Cost Savings

One of the primary advantages of BPO is the ability to reduce operational costs significantly by leveraging third party providers in lower wage locations. Outsourcing enables replacing high fixed labor costs with variable outsourcing fees.

Access to Expertise and Technology

BPO providers maintain deep expertise and the latest technologies to perform specialized business processes efficiently. Companies can benefit from skills, tools, and capabilities that would be expensive to develop in-house.

Focus on Core Business 

Outsourcing non-essential functions allows companies to direct more management focus, resources, and investments towards core business activities that drive revenue and differentiation in the marketplace.

Scalability

BPO contracts allow companies to easily scale operations up or down as business needs change. This provides more flexibility and agility versus carrying fixed in-house staffing costs.

Process Efficiencies

Experienced BPO providers can often optimize and standardize processes executed frequently for multiple clients to improve efficiency, quality, speed, accuracy, and compliance.

Risk Mitigation

Companies can transfer portions of risk, regulatory compliance, litigation, and liability for certain business processes to the outsourcing provider.

Clearly BPO offers some compelling strategic and financial advantages that enable companies to compete and thrive in their industries. However, realizing these benefits requires careful vendor selection and management – especially for customer-facing processes.

Potential Downsides of BPO for Customers

While outsourcing can certainly benefit companies on the cost, efficiency, and focus fronts, it also poses some potential customer experience risks that must be managed closely to prevent brand reputation damage and customer churn. Some key downsides of BPO from the customer perspective include:

Dehumanized Customer Service

In some cases, outsourced customer service agents rely heavily on scripts and lack the freedom to think outside the box to resolve customer issues empathetically. This can lead to frustrating transactional interactions rather than personalized service.

Communication Challenges

When outsourcing customer service offshore, communication barriers arising from language, cultural differences, and accents can negatively impact interactions. Customers may find it difficult to communicate needs effectively.

Lack of Context/Understanding

With third-party outsourced staff, there are risks that customer history, preferences, and values are not maintained or referenced to personalize and enrich engagements.

Reduced Quality Control

Direct control and visibility into day-to-day operations is lost with outsourcing. Lower quality interactions and process execution can sneak through without tight governance and SLAs. 

Data Security Concerns

Customers may have anxieties about sensitive data like financial information and PII being exposed when handed off to external overseas providers.

Delayed Issue Resolution

Having to relay customer service issues through an intermediate third party can lead to delays, miscommunications, and potentially more steps to achieve resolution.

Inconsistent Experiences

When customers engage a brand’s outsourced team, the experience quality can vary widely agent-to-agent leading to frustration and perceptions of unpredictability. 

Clearly BPO introduces risks of degrading personalized and quality customer engagements if not managed diligently. However, positive customer experiences can certainly be maintained and fostered with the right strategies.

Key Factors Impacting Customer Experience with BPO

There are a few critical factors that determine whether customers will have positive or negative experiences when engaging with outsourced teams representing a brand’s services:

Provider Selection

Choosing providers with extensive industry expertise and processes focused on delivering optimal CX is paramount. Review provider CX philosophies, success stories, and satisfaction rankings carefully.

Governance Model

Solid SLAs, performance metrics, quality monitoring, reviews, and accountability models must be established to closely govern provider CX delivery.

Agent Training

Agents should receive rigorous customer-focused training on soft skills like empathy, listening, problem solving, and verbal/written communications. Technical skills can be learned – CX mindset is critical.

Cultural Alignment 

Optimize outsourced interactions by instilling company mission/values into agents and emphasizing respect for diversity, inclusivity, and localization preferences of customer base.

Oversight and Feedback

Have mechanisms for direct monitoring of customer interactions, gathering feedback, conveying complaints, and facilitating continuous improvements with the provider.

Data Integration

Ensure outsourced teams have access to comprehensive customer data including history, preferences, concerns, and objections to enable personalized, context-aware service.

Consistent Processes

Clearly document customer service processes including escalations to be followed consistently across in-house and outsourced teams. Align approaches tightly.

Seamless Hand-offs 

Set expectations for smooth hand-offs between teams and optimized transfer of context/status to prevent customers from having to repeat issues and information.

Optimizing these factors helps ensure outsourced CX aligns positively with the brand rather than deteriorating into frustrating impersonal transactions.

Strategies for Maintaining Quality Customer Experiences with BPO

For companies leveraging business process outsourcing, here are some proven strategies for protecting and enhancing customer satisfaction:

Set Clear CX Expectations in Provider Contracts

SLAs, performance metrics, Quality Assurance, governance, etc. should be established contractually to lock in commitments upfront for delivering high-caliber CX.

Conduct Rigorous Provider Due Diligence 

Thoroughly evaluate providers’ capabilities, track record, culture, staffing, processes, and CX vision to assess fit. Conduct site visits and audit operations if warranted.

Ensure Ongoing Provider CX Training & Development

Require regular customer-centric skills training, workshops, and coaching to reinforce soft skills and the latest techniques for optimizing CX value.

Implement Tight Governance and Oversight

Monitor performance, interactions, compliance, data, and customer feedback closely. Conduct regular business reviews. Don’t take an “out of sight, out of mind” approach.

Gather Direct Customer Feedback 

Implement Voice-of-Customer mechanisms like surveys, call/chat monitoring, and customer advisory panels to monitor satisfaction and capture enhancement opportunities.

Facilitate Seamless Cross-Team Collaboration 

Build connections, share knowledge, host team building, and develop escalation processes to enable collaboration between in-house and outsourced teams.

Integrate Customer Data and History

Provide outsourced teams access to CRMs and databases housing customer data so engagements can be personalized and context-driven.

Recognize CX Achievements

When outsourced teams deliver great CX, recognize their work through financial incentives, public praise, and rewards to re-enforce excellence.

While BPO introduces CX risks, savvy management, governance, collaboration, and customer-centric processes can ensure positive brand experiences are continuously delivered across both internal and outsourced teams.

Conclusion

Business process outsourcing enables companies to lower costs and focus on strategic priorities by leveraging external specialists for non-core functions. However, the customer experience implications must be evaluated and managed carefully when outsourcing customer-facing processes like service and support. 

There are certainly pitfalls like poor communication, lack of personalization, and delayed issue resolution that degrade CX if outsourcing relationships are not set up and governed properly. Companies must select providers focused on customer excellence, implement training and oversight programs, gather direct CX feedback, and facilitate collaboration between in-house and outsourced staff.

With the right provider partnerships and governance models emphasizing customer satisfaction, organizations can certainly benefit from BPO cost and efficiency gains while simultaneously delivering positive brand experiences. By maintaining high CX standards externally and internally, BPO can become an advantageous strategic tool rather than a detriment to customer loyalty and lifetime value.