Although the benefits can be extensive, there are many risks associated with business process outsourcing.
- Risk is seen as the biggest potential issue with BPO. Risk can be reflected in security issues in relation to sensitive data and privacy, risk of losing independence and potentially losing control.
- Loss of flexibility in reacting to changes in business conditions. It is important that communications continue throughout the life cycle of any BPO agreement. This means informing the BPO provider of any change of strategy or conditions that might impact their ability to function properly.
- Potential threat to security or access to confidential information. There are many examples where confidential data has gone ‘astray’ or been sold. Processes and procedures must be put in place to ensure that only certain personnel can access specific information, especially with payroll systems, HR and client records.
- Staff turnover. It is expected that within call centres, for example there may be a fairly high turnover of staff, typically some 30%, but typically within BPO companies this can be up to 50%. This can be critical because losing key people can have a serious impact operationally, e.g. having to retrain people on a particular system or product within a call centre if people are leaving. Also, if absenteeism is high within a call centre environment, this will naturally badly impact customer service and call waiting times.
- Cultural differences. If a BPO company’s staff is based abroad, for example in India, there can be potential problems. This can be anything from communications difficulties to not totally understanding what perhaps a British customer expects. Many BPO off-shoring companies train their staff in order to resolve this.
- Job losses. People often believe that BPO only leads to staff losing their jobs. This could be true to a certain extent, but while there might be a perceived threat to staff’s finances, generally the roles that are outsourced are those which typically a company can have difficulty fulfilling anyhow.
- Potential loss of managerial control. Naturally it can be easier to manage your own personnel than relying upon a third party, but again, this can be resolved with good communication and regular update meetings.
- BPO can badly impact customer relationships as it may eliminate direct communication between a company and its’ customers.
- Failure to meet service levels. This can be caused by changing needs, unclear objectives or through incompetence.