What is Customer Service BPO?

07 Jun 2023 By: Michael Kansky

Updated

Part of becoming an effective business is looking for ways to cut costs, free up time, and focus on core aspects of the business. This is why so many business leaders turn to business process outsourcing (BPO). Outsourcing allows businesses to expand their teams and improve their customer satisfaction faster than they thought possible. 

BPO is the practice or delegation of outsourcing entire business functions to be handled by a third-party service provider. 

It’s evident that if a company has poor customer service, it will negatively impact the company’s success. Businesses grow through customer loyalty, making solid customer service essential. It helps improve satisfaction, meet customers’ expectations, and reduce friction. Additionally, providing great customer service allows companies to retain talent, recover customer acquisition costs, and foster brand loyalty. 

A survey by Bain & Co found that a 10 percent increase in customer retention can lead to a 30 percent increase in the company’s value. It goes without saying that organizations prioritizing customer service are successful.


Customer Service BPO allows businesses to outsource their customer service operations to third-party providers. This can improve efficiency and customer satisfaction while allowing businesses to focus more on their core operations and strategic growth.
Companies should carefully consider their customer service outsourcing partner, looking at factors such as expertise, reputation, cultural compatibility, technological capabilities, and cost considerations. Using BPO successfully involves clear communication and goal-setting, along with regular monitoring and feedback.
Despite the advantages, BPO also has potential downsides, including public backlash, communication breakdowns, learning curves, loss of control, security breaches, and potential hidden costs. Businesses must thoroughly evaluate these factors and implement a systematic approach to managing outsourced services.
The main types of BPO are offshore (outsourcing to a distant country), nearshore (outsourcing to a nearby country), and onshore (domestic outsourcing). Businesses should choose the type that best suits their unique business needs and financial goals.
By choosing the right outsourcing partner and following best practices, companies can optimize their operations, enhance customer satisfaction, and drive sustainable business growth and success.
While Business Process Outsourcing (BPO) can offer significant benefits like cost reduction and efficiency, it also comes with potential drawbacks that businesses should consider. One key disadvantage includes potential communication breakdowns, which can lead to a siloed company structure and hinder effective teamwork. Hiring the right BPO partner, ensuring seamless communication, and creating a scalable plan can mitigate these risks and help businesses effectively leverage BPO strategies for success.

BPO
Business process outsourcing

Understanding Customer Service Outsourcing

Customer service outsourcing has great advantages but also comes with risks and challenges. If you have the right components in place, outsourcing can save money, increase revenue, reduce workloads, provide access to best-in-class technology, and more. To make certain your outsourcing efforts succeed, here are some outsourcing customer service channels that can help:

  1. Call center outsourcing lets businesses focus on their core products and services. It provides more productive time for front office business operations like product development, marketing, and sales.
  2. Help desk outsourcing is a valuable service wherein a provider manages the resolution of user issues and technical issues concerning IT infrastructure and applications. This outsourcing solution offers several advantages to organizations, including the avoidance of staffing challenges, enhanced user satisfaction, and decreased support expenses.
  3. Social media outsourcing holds significance as well. Social Media Management focuses on providing quick responses and the number of people spending their spare time on various social media platforms.
  4. Live chat and email support boost the confidence of clients to do business with you knowing they can get immediate help if needed. They also help reach your target customers.

As reported by Forbes, achieving exemplary customer service begins with having core values and a clear mission to share with your customer service teams. 

Benefits of Customer Service Outsourcing

Customer service outsourcing offers several benefits to businesses. One significant advantage is cost savings and improved efficiency, which reduce overhead expenses such as infrastructure costs. Outsourcing providers often have specialized technology and infrastructure in place. This allows businesses to access advanced tools and systems without significant investments.


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Another advantage is scalability and flexibility. When customer demands vary, outsourcing allows companies to meet fluctuating needs effectively. During peak seasons or high-demand periods, outsourcing providers can quickly scale up operations. They can then efficiently address customer inquiries and provide prompt support. During slower periods, businesses can scale down operations to cut costs.

Outsourcing customer service enhances the customer’s journey. With outsourced teams, businesses can offer 24/7 availability and support from dedicated teams of high-quality agents. Additionally, outsourcing providers often offer multichannel support options, including phone, email, chat, and social media. From here, customers can choose their preferred communication method. Outsourcing providers also have expertise in handling customer inquiries and complaints, resulting in efficient and satisfactory resolution of issues.

Types of BPO 

While both BPO and customer service outsourcing involves delegating business processes to third-party agencies, BPO encompasses a broader range of functions beyond customer service. These might include finance and human resources, for example. Customer service outsourcing, on the other hand, specifically focuses on outsourcing customer support and related activities.

There are three main types of BPO:

  1. Nearshore outsourcing involves delegating processes to a nearby country, offering geographic proximity and cultural alignment. 
  2. Offshore outsourcing involves outsourcing to a distant country for cost savings and access to specialized skills. 
  3. Onshore outsourcing refers to domestic outsourcing, providing local expertise and control. 

Organizations must carefully evaluate their unique business needs and priorities to select the most suitable outsourcing approach. The choice depends on factors such as cost, expertise, and a company’s needs.

BPO Call Centers

A BPO call center is a centralized facility or outsourced service provider. It handles a company’s inbound and outbound customer interactions via telephone. It serves as a primary point of contact for customers. It provides support, resolves queries, and assists with various service-related matters. Call centers are typically equipped with advanced communication technologies. These include phone systems, customer relationship management (CRM) software, and other tools. All of them aim to efficiently manage high volumes of inbound and outbound calls.

BPO leverages advanced technology to significantly enhance its efficiency, accuracy, and customer service quality. Utilizing AI-powered systems, modern CRM platforms, and front-line communication tools, BPO providers can streamline processes, reduce human error, and provide faster, more personalized responses to customer inquiries. This technological edge supports data-driven decision-making, providing businesses with insightful analytics and performance metrics to aid in strategic planning. For any business contemplating BPO, this technology-driven approach ensures quicker issue resolution, improved customer relationship management, and ultimately a superior customer experience. By harnessing the power of these technological developments within BPO operations, businesses can not only cut back costs and boost efficiency, but also amplify customer satisfaction, engagement, and loyalty.

Types and structures of BPO call centers

  1. Inbound Call Centers: These call centers primarily handle incoming customer calls. They focus on addressing inquiries, processing orders, and handling complaints. Inbound call centers often require call center agents with strong customer service and problem-solving skills.
  2. Outbound Call Centers: Outbound call centers focus on making outgoing calls to customers or potential leads. They are commonly used for telemarketing, sales campaigns, customer surveys, appointment scheduling, and debt collection. Outbound call centers typically require call center agents with persuasive communication skills.
  3. Blended Call Centers: Blended call centers combine both inbound and outbound call center functions. Agents in blended call centers handle both incoming and outgoing calls. This allows for flexibility and efficient use of resources. This type of call center is suitable for organizations with fluctuating call volumes and varying customer service needs.

Call Center Structures

Call center structures can vary based on location and organizational preferences:

  1. Onshore Call Centers: Onshore call centers are located within the same country as the company they serve. This structure offers advantages such as minimal language and cultural barriers, similar time zones, and potential cost savings compared to in-house operations.
  2. Offshore Call Centers: Offshore call centers are located in a different country than the company they serve. This structure allows for cost savings through labor arbitrage and access to a global talent pool. It offers the potential 24/7 customer service coverage due to time zone differences.
  3. Nearshore Call Centers: Nearshore call centers are situated in neighboring or nearby countries. This structure offers benefits like geographic proximity, cultural affinity, and potentially lower costs compared to offshore options. It enables companies to maintain closer collaboration and similar time zones while benefiting from cost-effective outsourcing.

Overall, BPO call centers play a pivotal role in delivering efficient and effective customer service, regardless of their specific type or structure. Businesses have the opportunity to enhance customer satisfaction, streamline operations, and focus on core competencies while outsourcing customer interactions to specialized service providers. As with everything, there are pros and cons to consider.

Disadvantages of BPO

Business Process Outsourcing has gained popularity in recent years as a means for businesses to streamline their operations and reduce costs. Despite its advantages, BPO comes with its fair share of disadvantages that business owners should consider. If not managed effectively, these disadvantages can significantly impact businesses and their customer base. Let’s take a look at some of the current drawbacks.

Public Backlash

When outsourcing companies hire full-time employees from other countries, it can lead to negative public and brand perception. Unfortunately, existing clients may view international outsourcing as sacrificing domestic jobs. They might associate nondomestic talent with lower-quality services or products.

Communication Breakdowns

Without careful management, BPO can lead to a more siloed company structure. This refers to a structure where business divisions operate independently and avoid sharing information. This lack of fluid communication and other possible communication barriers can result in breakdowns in information flow. That, in turn, might hinder a team’s ability to deliver what’s needed. To mitigate this, a scalable plan should be implemented to facilitate seamless communication between internal and outsourced teams.

A Learning Curve

When a BPO company is hired, there’s a learning curve in understanding the client company, its customers, and its customers’ needs. This learning process can disrupt the client company’s product or service quality, causing concerns among stakeholders. It’s important to start outsourcing gradually and ask potential BPO companies how they plan to address this issue.

Loss of Control

When business functions are handled internally, managers can provide oversight to maintain consistency and quality control. However, when these functions are outsourced, companies relinquish direct control over this oversight. Therefore, it’s crucial to carefully select a reputable BPO company and support staff that can be trusted to safeguard your company’s reputation. Interviewing previous customers of the third-party company can provide insights into their quality-control processes and help secure a reliable partnership.

Security Breaches and IP Protection

Sharing sensitive information about your IT systems with external vendors inherently reduces security. While this risk is often necessary, it is crucial to carefully consider the implications before engaging with vendors. Damage can be done if your intellectual property (IP) rights or data security are violated. Plan to do a regular security risk evaluation, document your security practices and expectations, and hold outsourcing vendors accountable.

Shared Reputational Risks

To avoid potentially putting their reputations at risk, businesses should thoroughly vet the business practices of potential BPO companies before hiring them. Including a commitment to moral practices in mutually signed contracts is also helpful in steering clear of any mishaps.

Hidden Costs in Contractual Agreements

Signing contracts with BPO companies entails dealing with extensive fine print, including contingencies and associated fees for specific circumstances or actions. These fees can accumulate rapidly, leading to unexpected costs. To prevent future problems, thoroughly review contracts, preferably with legal expertise, to identify and avoid any potential issues.

Factors to Consider When Choosing a Customer Service Outsourcing Partner

When choosing a customer service outsourcing partner, it is essential to consider various factors.

  1. Expertise and Experience: Assess whether they have relevant knowledge and experience in your industry, as this can greatly impact their ability to understand your customers’ needs, answer your customers’ questions and provide effective support.
  2. Reputation and Track Record: Look for reviews, testimonials, and case studies to gauge their performance and customer satisfaction levels. A reputable partner with dedicated agents and a proven track record of delivering high-quality customer service is more likely to meet your expectations.
  3. Language and Cultural Compatibility: This cannot be overlooked, especially if the outsourcing partner will interact directly with your customers. Confirm that their customer service agents are proficient in the languages your customers speak and possess cultural awareness to provide a seamless and personalized experience.
  4. Technological Capabilities and Security Measures: Evaluate the partner’s technology infrastructure, including their customer relationship management (CRM) systems, communication tools, and data security protocols. They should have robust measures in place to protect customer information and secure handling of data.
  5. Cost Considerations and Contract Flexibility: Assess the pricing models offered by the outsourcing partner and determine if they align with your budget and expected ROI. Additionally, evaluate their contract terms to verify flexibility in scaling operations, adapting to changing needs, and accommodating any future modifications or expansions.

Considering these factors when choosing a customer service outsourcing partner will help you make an informed decision and select a partner that can effectively meet your business requirements and deliver exceptional customer service, states Forbes.

Best Practices for Successful Customer Service Outsourcing to a BPO

To establish successful customer service outsourcing, follow these best practices:

  1. Employ Effective Communication and Collaboration: Establish clear channels of communication with the outsourcing provider and maintain regular contact to address any issues promptly.
  2. Set Clear Goals and Expectations: Clearly define desired outcomes, performance metrics, and service-level agreements to ensure alignment between both parties.
  3. Perform Continuous Monitoring and Quality Assurance: Implement mechanisms to regularly track and evaluate the outsourced customer service operations. This includes monitoring call recordings, conducting customer satisfaction surveys, and performing quality checks.
  4. Conduct Regular Feedback and Performance Evaluations: Provide constructive feedback to enhance the outsourcing provider’s performance and maintain a strong working relationship. Conduct regular evaluations and share insights to drive improvement.
  5. Build a Strong Partnership: Foster a collaborative and trusting relationship with the outsourcing provider. Encourage open communication and work together to enhance customer service strategies.

By following best practices, you’ll increase your outsourcing success and achieve your desired outcomes.

BPO Statistics, case studies, growth and trends

There are various data and statistics available that showcase the growth of the BPO industry, particularly in customer service:

  1. Market Growth: The business process outsourcing (BPO) sector has seen significant growth in the last few years. According to a report by Grand View Research, the global BPO market was valued at 221.5 billion USD in 2019 and is expected to grow at a compound annual growth rate (CAGR) of 8% from 2020 to 2027.
  2. Customer Service Outsourcing: Specific to customer service outsourcing, a report by Mordor Intelligence shows that the global customer service outsourcing market was valued at 84.1 billion USD in 2020 and is expected to reach 130.0 billion USD by 2025, at a CAGR of 9.1% over the forecast period 2020 – 2025.
  3. Efficiency Gains: A survey done by Deloitte highlighted that 59% of businesses who outsourced reported a cost savings as their main benefit. This suggests that organizations that outsource customer service can reduce overhead expenses and streamline their operations more effectively.
  4. Customer Retention: As per Bain & Co, a 5% increase in customer retention can increase a company’s profits by 25 to 95%. Given the potential for significant return on investment, the move towards outsourcing customer service to increase customer satisfaction seems like a valuable strategy.
  5. Nearshore and Offshore Outsourcing: As businesses expand globally, there is a growing trend of nearshore and offshore outsourcing. According to Market Research Future, the global nearshore outsourcing market is expected to reach approximately 35.35 billion USD by 2023, growing at a CAGR of 11% from 2017 to 2023. Similarly, Statista reported that the global market for offshore services was estimated at 92.5 billion USD in 2019, showcasing the popularity of this BPO strategy.

    These data highlight that choosing the right BPO partner in customer service can greatly improve the overall performance and profitability of a business. With the industry projected to grow significantly in the coming years, companies looking into BPO should carefully consider these benefits and trends.

    Remember, careful selection of outsourcing partners, clear communication, continuous monitoring, and feedback are all key factors that will help optimize the outsourcing experience and increase overall business success. Choose a BPO partner that aligns with your company’s values, understands your industry, and offers a truly personalized customer service experience to reap the maximum benefits of this proactive business strategy.
  6. COVID-19 Impact: During the COVID-19 pandemic, businesses faced with uncertainty and rapidly changing customer behavior have become increasingly dependent on BPOs. With the brunt of lockdown measures and travel restrictions impacting traditional brick-and-mortar businesses, online platforms and digital services saw unprecedented spikes in user traffic. According to a survey by NTT Ltd, 70% of organizations around the world accelerated their digital transformation strategies because of the crisis. As businesses adapt to this new digital-first reality, demand for outsourced customer service BPOs will likely continue to grow into the future.
  7. Multichannel Support: The demand for multichannel support in customer service is also growing. According to the Aberdeen Group, companies with extremely strong omnichannel customer engagement retain on average 89% of their customers, compared to 33% for companies with weak omnichannel customer engagement. BPOs can specialize in providing this sort of high-quality multichannel support.

    Overall, these data indicate that businesses looking into BPO, particularly for customer service, will find a thriving market ready to respond to their unique needs and help them achieve success. By aligning with the right BPO partner, businesses can unlock growth potential, improve customer loyalty, reduce costs, and maintain a competitive edge in their respective industries.
  8. Flexibility and Scalability: BPO can provide businesses with significantly more flexibility, enabling them to quickly scale up or down based on demand. According to a survey by Deloitte, 47% of companies said they used outsourcing to address capacity issues.
  9. 24/7 Customer Service: The need for around-the-clock customer service is increasing, and BPO can make it possible. A survey by Microsoft found that 36% of consumers worldwide expect customer service representatives to be available 24/7.
  10. Customer Satisfaction: Businesses that outsource their customer service often see an increase in customer satisfaction. A report by the Hackett Group found that businesses using outsourced services could improve customer service while reducing costs by 26%.

Whether you’re a small business owner just starting out or a seasoned business executive, considering BPO for your customer service needs could be a game-changer—freeing up your time to focus on core business priorities, improving customer satisfaction, and driving growth.

Conclusion

Business process outsourcing has emerged as a valuable solution for growing businesses seeking to optimize their operations and focus on core aspects of their business. By entrusting administrative tasks to external partners, companies can focus on cost reduction, saving time and enhancing their overall efficiency. 

One specific area where this proves vital is in maintaining excellent rapport with their existing clients. Recognizing the significance of customer satisfaction, businesses can leverage BPO to improve customer experiences, meet expectations, reduce friction, retain talent, recoup acquisition costs, and foster long-term brand loyalty. By embracing BPO, companies can unlock new growth strategies and success.

Customer Service Outsourcing Guide
Michael Kansky

Michael Kansky, CEO of LiveHelpNow and HelpSquad, has leveraged his 20 years of industry experience and innovative support strategies to revolutionize customer service approaches, making LiveHelpNow a leading customer service software provider, and establishing HelpSquad as a bridge between businesses and customer needs. You may contact Michael on LinkedIn: https://www.linkedin.com/in/mkansky/LInkedIn