| Outsourcing key company functions to a BPO | | | | premium wage, but whose time is split between core |
| (Business Process Outsourcing) firm is a major | | | | premium functions and non-core nonpremium functions. |
| business decision that is fraught with great risk, | | | | This is inevitable, as human beings are imperfect, |
| considered against the upside of tremendous cost | | | | however when contracting with a BPO firm a business |
| savings and increased profitability. Outsourcing for | | | | manager has a greater ability to identify and specify |
| even non-core company functions can dramatically | | | | which resources are considered premium and how |
| alter the landscape of your business so it is advisable | | | | much they should occupy within the total package. In |
| to consider the decision carefully. Here are three of | | | | this way, outsourcing creates a more "a la carte" |
| the primary reasons why businesses choose to | | | | option to establish the balance of work, and price labor |
| outsource, along with the benefits gained by each | | | | according to its value. |
| practice. | | | | Advantage #3: Risk Mitigation. |
| Advantage #1: Lowering Costs: | | | | While outsourcing to a BPO firm can increase certain |
| Of course, this benefit is the most obvious, and the | | | | risks such as those that occur due to the |
| one that most managers are thinking of when they | | | | management of a remote workforce, or the numerous |
| begin to investigate options for outsourcing work | | | | cultural or language differences from those |
| outside of the company. The primary reason costs are | | | | workforces that may impede the normal flow of |
| lowered from outsourcing is because the BPO firm, | | | | business, other risks can be mitigated. Outsourcing |
| which is often located overseas, has much lower labor | | | | work in the long-term means that there are a number |
| costs on an individual basis. Also, if a BPO firm is large | | | | of investments, both human (workers' salaries) and |
| enough, it can realize and economy of scale by | | | | capital (hardware, software, etc.) that are now being |
| amortizing functions across different clients in a way | | | | made by the BPO firm instead of its clients. Risk is |
| that the main client could never achieve. | | | | reduced for the client, and even on the BPO firm side, |
| Advantage #2: Releasing "Premium" Resources. | | | | risk is spread across a number of clients and therefore |
| The principle here begins with the given that any | | | | mitigated. |
| company includes people who are being paid a | | | | |