Businesses across a wide range of industries have recognized outsourcing as a valuable way to access top-tier expertise, a cost-effective workforce, and infrastructure. Lower costs, improved productivity, faster turnaround, and more flexible staffing make outsourcing even more appealing.
As the BPO industry grows in sales and provides new employment opportunities, it becomes increasingly appealing to people, both those who want to become BPO Investors and those who desire to sell their expertise and experience on the open market. Several factors influence this industry and make it very challenging.
Regulatory Scenarios in different countries
Since the BPO industry began to expand at an unprecedented rate fifteen years ago, this has been the primary challenge. The United States was one of the first countries to discuss this new legal issue. Its regulatory bodies have created a slew of compliance-related documents to provide a consistent legal framework for outsourcing partners and employees.
The governing bodies of the European Union, the Philippines, and India are still working on this legal framework. Many new regulations are being enforced, but the outsourcing market will continue to stagnate until this is completed.
The Cost of Running Business
The BPO industry has been promoted as a major money-saving industry since it began to grow. It allows one to get access to the top prospects at a lower cost. While the BPO industry has grown into a revenue-generating industry over time, many outsourcing firms face investment and budgetary issues.
Outsourcing firms can deliver the highest performance at the lowest possible expense. This places a lot of strain on such corporations’ finances when they are expected to provide their everything while keeping the expenditure at minimal. As a result, the next big challenge is to meet consumer requirements and offer high-quality service.
Customer Expectations and Quality of Service
One major factor that affects all markets, including the BPO industry is the customer-centric market. This ensures that the BPO industry would have the best outcomes possible for its customers. In certain cases, outsourcing firms must also meet their customers and keep in constant touch with them. Clients are also very familiar with the best practices in the BPO industry thanks to social media. This places enormous strain on outsourcing firms, who are now forced to distribute their funds as thinly as possible to sustain the desired degree of service efficiency and revenue.
Customer demands are particularly difficult for outsourcing firms that are new to the industry. They would compete with existing firms by either lowering the cost of their product or reducing profit margins to improve service efficiency by recruiting top talent.
These three forces are not only influencing but also defining and rendering the BPO industry more challenging. Regulatory enforcement, as well as customer expectations and budget, remain primary concerns for outsourcing firms.
Employee Retention and Health Issues
Employee attrition has long been one of the most significant obstacles faced by BPO firms, including the largest ones. And as time goes by, the turnover rate just rises. It seems that BPO firms are yet to figure out how to keep their workforce working. BPO firms recruit new hires, devoting time and money to ensure a seamless onboarding process; however, consumer appetite for the particular job declines and BPO firms are pressured to let go of these workers. This raises the amount of time and resources expended on training new hires significantly.
Furthermore, there are unique health issues associated with this line of work. As you might be aware, BPO firms are located all over the world and have no territorial limits when it comes to both their customers and workers. This means the employees in this sector can be expected to operate on an irregular timeline, raising serious health risks.
Equity and Brand Building
Many of the factors we’ve discussed so far have a major impact on BPO companies’ branding strategies and their long-term business prospects. BPO businesses find it challenging to formulate a long-term branding strategy that delays the growth of brand equity. In any case, if they wish to be recognized on the global BPO market, these businesses must spend far more on their promotional campaigns than most companies. High job turnover rates result in many disappointed ex-employees, increasing the likelihood of negative word-of-mouth.
The above-mentioned challenges are why, although there are hundreds of BPO Companies in the United States, only a handful have identified themselves as big players. All BPO market members should consider taking a closer look at existing BPO firms and doing their best to figure out what policies have made these companies prosper. Most of these factors contribute to the fact that innovation in the BPO industry remains difficult. However, when rivalry heats up and the distinction between IT and ITES blurs, there is a strong possibility that the scenario will improve.