Top 4 Business Process Outsourcing Alternatives

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The business process outsourcing (BPO) market is projected to be $525B by 2030, compared to the $262B valuation today. 

Demand is a driving factor behind this. Companies in the US, for instance, are outsourcing more than 300 jobs annually. But:

  • Is business process outsourcing suitable for everyone?
  • And what are the top business process outsourcing alternatives? 

In this article, we will answer those questions. 

What is business process outsourcing?

Business process outsourcing (BPO) is the business strategy of having a third-party service provider, one often located overseas, of carrying out one or more of your core, back-office business processes.

Is business process outsourcing (BPO) right for every company?

BPO’s pros

BPO has many benefits, including: 

  • Reduced costs 
  • Reduced workload 
  • Having specialists work for you 
  • Having processes done faster, and more.  

BPO is especially fruitful for SMEs that do not have the office space, budgetary freedom, and other necessary resources to hire full-time, in-house staff. 

BPO’s cons

But BPO has downsides as well, such as: 

  • Language and time barrier between the client and the service provider 
  • Lack of personalized services 
  • Loss of control over process execution 
  • Sharing the company’s confidential information with an untested third party, and more. 

Verdict

BPO’s suitability for every company is based on its stance on these points. 

If the lower costs of BPOs, thanks to their economies of scale, for instance, are more critical to the firm than a personalized service, then BPO could be a viable choice. And vice versa. 

For companies that do not see BPO as a practical and/or suitable route, there are alternatives in the shape of business process automation technologies

Disclaimer

We are not suggesting that leveraging these tools is cheap and easy and should be the first choice. Neither are we saying that all processes can be automated through them. 

But if companies have the resources, their processes are automatable, and they are looking at alternatives, they can consider the following:

What are business process outsourcing alternatives?

1. RPA 

RPA is the primary business process outsourcing alternative. In fact, BPO providers themselves might leverage RPA in their processes to automate their handling of clients’ workflows. So businesses adopting RPA to automate their operations is akin to cutting out the middleman. 

RPA’s different programming options and the variety of RPA tools in the market mean businesses can automate a wide range of rules-based, repetitive, manual processes

The other benefit is that if companies require a tailor-made RPA tool, RPA consultants can create a personalized one for them.

You can see the extensive list of RPA’s use cases. But RPA can generally be used for: 

2. OCR

Optical character recognition (OCR) is a technology that can read large amounts of text. It can extract information from different forms and standardize them for employees to run compliance checks on the data. 

For instance, if companies are outsourcing their KYC auditing, to BPOs to have human-run preliminary checks on the client’s submitted documents, they can instead use OCR solutions to do it in-house. 

Once prospective clients submit their forms, OCR applications can read the information and look for answers to specific keywords to extract and put on the customer’s file, such as their credit score or employment status. 

Another use case for OCR is expense management. Instead of relying on outsourced accountants to read, verify, and input expense reports on the company’s books, businesses can use OCR solutions to do that for them.

OCR is another efficient business process outsourcing alternative because having software bots do this instead of a human will result in quicker, standardized, and accurate processing of data.

3. ML models 

Some companies might outsource their analytics to outside vendors. The data analytics outsourcing market, for instance, was worth almost $6B in 2020 and is projected to reach $60B by 2028. 

ML models aggregate a company’s data from different business applications, analyze them, and create data-driven reports on them

The implication is that instead of paying outside analysts to use these models to provide insight, you can train your own staff in the required techniques to use this software to get the same result. 

For instance, the technology corporation Dell sought to automate its copywiting analysis for its advertisements in order to increase CTR. They were able to experiment with their copywriting using ML models to automatically gain data-driven insight into which performed better (see Figure 1). 

Figure 1: Dell was automated its word-sentiment analysis to write more effective ads. Source: Persado

4. Workload Automation (WLA)

WLA’s main strength lies in scheduling, defining, ordering, and executing tasks within larger workflows. A main use case of WLA is ETL (extract, transform, and load) of data stored within different SAP applications in one location for easier accessibility. 

To run an efficient BI (business intelligence) campaign, a company operating in multiple markets, digital retailers, and brick-and-mortar stores, has to have all its data extracted from different applications and brought to one location for analysis. 

Instead of leveraging outsourced data extraction services to do this, you can leverage a WLA solution to program and automate your ETL practices in-house. 

For instance, a printing hardware manufacturer had 14,000 event-driven processes running every day, requiring 2 SAP specialists to manage the process interdependencies, such as ETL of data. Through leveraging WLA, they automated their data management.

For more on automation

If you want to learn about other automation tools for different use cases, read: And if you believe your business would benefit from adopting a business process automation tool, we have a data-driven list of vendors.

We will help you choose the best one tailored to your needs:

Find the Right Vendors

Bardia is an industry analyst at AIMultiple. He received his bachelor’s degree in economics from the University of California, Davis, in 2019, and his master’s degree in economics and finance from Bogazici University, in 2020. He has had experience as a financial analyst following graduation.

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