Outsourcing business processes to third-party providers – commonly called business process outsourcing or BPO – is extremely popular these days. And for good reason! BPO offers tons of benefits like lower costs, improved efficiency, and ability to focus on core strengths.

But handing off key processes to an external vendor also comes with risks. Many companies worry they’ll lose visibility and control over the outsourced operations.

In this post, we’ll explore practical tips to maintain oversight and governance when working with a BPO provider. You’ll learn:

What business process outsourcing is

The advantages it offers

Common concerns around loss of visibility and control

Strategies to retain visibility and control

Warning signs that you’re losing oversight

When to bring services back in-house

By the end, you’ll understand how to successfully leverage BPO without surrendering autonomy over critical functions. Let’s dive in!

What is Business Process Outsourcing?

First, what exactly is BPO? Essentially it means outsourcing specific business processes and operations to external service providers. Some examples of commonly outsourced processes include:

Customer service and support – Managing call centers and customer care

Finance and accounting – AP, AR, payroll, auditing

HR services – Benefits, recruiting, training

IT and systems management – Infrastructure, app development

Supply chain and logistics – Manufacturing, transport, warehouses

Sales and marketing – Lead gen, promotions, analytics

Leading global BPO providers include Accenture, Capgemini, Genpact, IBM, Wipro and more. Many operate overseas in places like India, China, Mexico for lower costs.

The BPO industry has boomed as companies look to reduce expenses, gain efficiencies and focus on core areas. It lets you hand over critical but non-core processes to specialists. Done well, outsourcing enables organizations to access world-class capabilities and shift resources to strategic initiatives.

Benefits of Working with a BPO

There are several key benefits that make business process outsourcing an attractive option for many companies:

Cost Savings

One of the primary advantages of BPO is lower operational costs. Service providers can provide economies of scale and perform processes at a fraction of the cost of in-house departments. Labor expenses are often significantly reduced, in particular when leveraging offshore talent pools.

Specialized Expertise and Technology

A quality BPO provider has deep expertise in their particular service domain. Their resources, knowledge, skills, and technology investments focused on executing specific processes outstrip what any single company can build internally.

Improved Efficiency and Productivity

Streamlining and standardizing processes, combined with BPO vendor experience and technology, allows for improved efficiency and productivity levels over in-house operations.

Focus on Core Business  

Routing non-primary activities to BPO providers enables companies to direct more capital, labor, and management attention on core functions that drive competitive advantage and revenue growth.

Access to Talent

BPO vendors maintain a wide pool of talent proficient in specialized business functions, often in lower-cost labor markets, which clients can access. This alleviates talent scarcity issues.

Flexibility and Scalability

The ability to rapidly scale BPO services up or down as business needs change provides greater flexibility and agility versus in-house fixed assets and headcount.

Concerns Around Loss of Visibility and Control

Despite its advantages, business process outsourcing also comes with significant risks. One of the most common apprehensions prospective BPO clients have is the potential loss of visibility and control.

Visibility refers to the ability to access timely, detailed, and accurate data and insights into the processes being handled by the service provider. It enables the client to monitor performance, compliance, risk factors, and more.

Control is the capacity to actively govern how outsourced processes are executed, intervene when necessary, enact changes, enforce quality standards, and ensure adherence to the contract.

Many companies struggle to maintain strong visibility and control with BPO engagements due to factors such as:

– Geographic distance from offshore providers

– Heavy reliance on vendor reporting  

– Language and cultural barriers

– Poorly structured contracts and SLAs

– Unclear expectations and requirements

– Inadequate governance protocols

– Overconfidence in vendor capabilities

– Communication and collaboration gaps  

Without proper oversight and governance mechanisms, companies essentially cede autonomy over key business functions to an external party. This opens the door for subpar service delivery, missed objectives, compliance issues, security risks, brand damage, and hidden costs to arise.

However, adopting the right approach can help organizations avoid these pitfalls and maximize the benefits of BPO.

How to Maintain Visibility and Control

There are a number of best practices companies can implement to ensure proper visibility and retain control over outsourced business processes:

Clearly Define Goals, KPIs and Metrics

Set clear expectations by defining measurable goals, key performance indicators (KPIs) and service level agreements (SLAs) for the BPO provider. Metrics should tie directly to business objectives and be granular enough to properly monitor performance.

Implement Robust Reporting and Analytics

Institute thorough operational reporting and analytics covering factors like volumes, productivity, quality, compliance, customer satisfaction, costs, revenues, and profitability. This provides visibility into day-to-day execution.

Conduct Regular Reviews and Audits   

Schedule routine performance reviews, site visits, and formal audits to evaluate adherence to contractual obligations. Reviews provide executive-level oversight while audits verify processes are performed to required standards.

Utilize Technology for Oversight 

Implement technology solutions to collect data, monitor operations, enforce rules, assess risk factors, and provide remote visibility in real-time. Examples include business intelligence systems, surveillance systems, and risk management platforms.

Foster Open Communication  

Encourage frequent, open communication and knowledge sharing between client and provider teams through channels like standing meetings, site visits, centralized documentation, employee exchange programs, and collaborative technologies.

Signs You May Be Losing Visibility or Control

Warning signs that visibility or control over outsourced processes may be diminishing include:

– Missing or inadequate management reporting from vendor

– Lack of real-time operational insights

– Issues take longer than expected to detect and resolve

– Little or no change control and approvals

– More customer complaints than expected

– Repeated service failures and SLA breaches  

– Unexpected increases in costs

– Non-compliance with laws, regulations, or security standards

– Being surprised by vendor operational decisions

– Poor vendor relationship and lack of collaboration

Catching these issues early allows corrective actions to be taken before they lead to bigger problems.

When to Bring Services Back In-House

Despite best efforts, some companies find that BPO engagements fail to achieve the desired benefits and that critical processes operate suboptimally outside their control. Re-insourcing services may be prudent when:

– Vendor consistently underperforms and shows no improvement

– Company objectives or needs shift

– Benefits no longer justify outsourcing costs  

– Important intellectual property is at risk

– Customer satisfaction suffers 

– Growth brings scale economies that support in-house handling

– The business wishes to increase operational control

The decision to re-insource should not be taken lightly given the costs, effort, and risks of transitioning processes back in-house. Careful analysis is required to determine if the move is justified.

Conclusion

Business process outsourcing can be extremely beneficial, but also poses the hazard of decreased visibility and control. Companies can mitigate these risks through careful vendor selection, tightly crafted contracts, robust governance protocols, active performance management, and open communication.

With appropriate oversight measures in place, organizations can feel confident unlocking the advantages of BPO without surrendering autonomy over critical functions. The tips covered in this article provide a blueprint for maintaining visibility and control with outsourcing arrangements.