Business process outsourcing (BPO) is a fast-rising industry in today’s evolving and competitive market landscape.
From being a cost-cutting method, business process outsourcing services have become a necessity.
Needless to say, BPO has been embedded in the business culture across global industries. Today, it has permeated various domains, including customer support, human resources, accounting, and information technology, among others.
Let’s trace the evolution of global BPO and how it shaped customer service throughout the years.
Introduction to Global BPO
To put it simply, BPO is the act of hiring a third-party provider to execute secondary business tasks. This includes back-office functions that don’t require customer interaction, like data entry, HR management, and IT support, and front-office functions such as customer support and sales.
However, before this expansion, the early driver of outsourcing was having access to expertise at a reduced cost. Since the primary objective was to hit two stones at once, many companies sought to outsource their operations to countries with lower labor costs.
This has led to the establishment of BPO companies in countries like India and the Philippines that mostly cater to clients based in the United States and Europe. Eventually, the term “offshoring” was used to describe the process of outsourcing to these regions.
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Evolution of BPO: From Cost-Cutting Method to Strategic Partnerships
Initial Stages of BPO
The concept of BPO dates back to the late 1970s when manufacturing companies hired external providers to perform supply chain processes on their behalf.
In 1989, BPO made its first significant impact when Eastman Kodak, founder of the Kodak company in New York, decided to outsource its IT systems to IBM, one of the biggest tech giants. The company was tasked with designing, creating, and operating Kodak’s data center.
Many corporate enterprises took notice of Kodak’s decision, and it didn’t take long for other companies to follow suit, with IBM dominating as the first IT service provider.
Large companies like Coca-Cola also saw potential in the advantages of outsourcing. They expanded their operations in the Philippines, where labor costs for bottle manufacturing are much cheaper.
As competition increased, organizations recognized the value of migrating their operations to save costs while fulfilling business needs.
Strategic Shift in BPO Partnership
While the early days of BPO promised cost-cutting measures, it underwent a dramatic transformation due to changing market trends and technological advancements.
Before the 2000s ended, BPO providers began to adapt new methodologies for efficiency and developed new competencies across multiple industries. With modern technologies and a skilled workforce, BPO companies began to align their services with overall business goals: better customer service, profit, innovation, and competitive edge.
As we fast-forward to the digital era, business processing outsourcing solutions have expanded into automation, data analytics, cybersecurity, market research, and more. In fact, the BPO market is expected to rise at a 9.1% compound annual growth rate (CAGR) until 2030.
BPO in the Age of Artificial Intelligence
Artificial Intelligence (AI) has caused a powerful shift in the corporate world, and the BPO sector is no exception. It has caused positive changes, including operational efficiency, scalability, data analytics, and improved customer experience.
The adaptation of AI has led to the personalization of customer support through analyzing individual customer data. Through AI, agents can quickly identify the sentiments of each customer and deliver customized solutions to their problems.
Moreover, AI chatbots and interactive voice response systems have effectively supported customer service representatives by giving quick resolutions or routing callers to the most suitable agent whenever they need it the most.
Overall, the integration of AI in BPO services allows the synergy of machine and human efforts to boost engagement and customer retention.
Impact of BPO on Customer Service
- Enhanced Service Delivery
The evolution of BPO from a simple business solution to a strategic partnership between businesses has helped many companies provide 24/7 and multilingual customer support and quick responses to customer concerns.
Through emerging technologies like AI algorithms, agents can improve their efficiency and obtain the data they need to give excellent customer service.
- Quality Control and Standardization
BPO has also upgraded service quality and standards across different regions. Through quality monitoring, performance evaluations, and training programs, BPO service providers can guarantee exceptional customer experience and avoid risks that can put their clients in a bad light.
- Customer Feedback and Continuous Improvement
Using data-driven analytics and feedback mechanisms, BPO can continuously strive to enhance customer satisfaction. Customer surveys can reveal useful insights to better understand customers and identify ways to enhance their experience.
For example, Customer Satisfaction Score (CSAT) is a popular metric used to measure the level of satisfaction a customer experiences upon using a company’s product or service.
The Future of BPO and Customer Experience
The global BPO industry has undergone significant transformations, from its early days as a cost-cutting strategy to becoming an ideal partner in business operations.
Initially driven by the need for expertise and reduced costs, BPO has evolved to offer comprehensive solutions that include not only back-office functions but also critical customer-facing services. Technological advancements, particularly in AI, have further enhanced the capabilities of BPO, enabling personalized and efficient customer support.
Looking ahead, the future of BPO is promising, with continuous growth anticipated. The integration of advanced technologies like AI and machine learning will further improve operational efficiencies and customer experiences. However, the industry must navigate challenges such as data security and cultural differences to maintain its upward trajectory.Ultimately, for companies to maximize the benefits of BPO, they must remain adaptable and focused on a customer-centric approach. By leveraging innovative solutions and maintaining high service quality standards, BPO can continue to significantly enhance customer experiences worldwide.
