Business Process Outsourcing (BPO) refers to the practice of employing external, third-party service providers to handle select internal or customer-facing processes. Companies both large and small use BPOs to address critical operational needs, reduce costs, foster innovation, and more. 

Statista reports that, in 2019, the BPO services industry topped $92 billion dollars in global market size. And the outsourcing sector only continues to grow.

Over the last five years, the number of businesses competing in the BPO space has grown by 3.4%. As of 2023, there were more than 262,000 Business Process Outsourcing services operating in the US alone, according to IBIS World.

But why are so many businesses leveraging BPO services? Does a BPO partnership actually make sense for your business? And how can you evaluate and select prospective BPO partners?

Read on for an overview of the Business Process Outsourcing sector and a checklist of steps you’ll need to take when choosing the right BPO services for your business.

What is Business Process Outsourcing (BPO)?

Business Process Outsourcing (BPO) refers to the common business practice of delegating internal operations or customer-facing processes to external, third-party service providers. Businesses large and small are turning to BPO partnerships as a way to streamline day-to-day operations, reduce internal labor costs, and free up their own employees to focus on critical in-house functions.

Going Beyond Task Orientation–Full Department Outsourcing

Business Process Outsourcing is about much more than simply re-assigning individual tasks. Depending on your business needs, you may find it more efficient and economical to outsource the work of entire departments. 

Fortunately, the BPO sector is rapidly expanding. This means you have plenty of service providers to choose from. Your business can select a BPO partnership tailored to your specifications, taking into consideration factors such as specialization, breadth of service, and geographical location—whether offshore, nearshore, or domestic.

You have plenty of options when it comes to choosing a BPO partner. But this can present a challenge as you seek the right BPO service provider for your organization’s distinct needs. How can you narrow down your options? 

The first step is to identify your company’s outsourcing needs. Start by considering some of the top reasons that other companies choose outsourcing.

Why Companies Choose to Outsource

Selecting the Right BPO Partner is Critical

The right BPO partnership can drive your business forward. The wrong partnership can have the opposite effect. A poorly selected BPO partner can diminish operational efficiency, service quality, data security, internal communication, cost management, and business continuity. The last thing you want to do is undermine your commitment to your clients in the name of cost cutting measures.

Failure to meet service level agreements (SLAs) can damage client relationships and carry serious negative long-term effects for your business. Mitigate these risks by taking a careful and strategic approach to selecting your BPO partner.

How To Select the Right BPO Partner

Selecting the right Business Process Outsourcing (BPO) partner is a critical decision. The right BPO partnership has the potential to significantly enhance the efficiency, success, and long-term growth of your organization. So how can you be sure that you’re choosing the right BPO partner for your business?

Use the steps and resources below to prepare for, interview and select the right BPO for your project.

Business Process Outsourcing (BPO) Evaluation Checklist

1. Prepare your Project for BPO Estimate: A good prospective Business Process Outsourcing (BPO) provider will want to discuss your project in detail first. A solid cost estimate will be based on the actual features of your project. You should expect a qualified BPO partner to address the following key items before providing an estimate:
   1. Project Scope
      1. Define the boundaries and objectives of the project clearly.
      2. Identify specific tasks and processes that need to be outsourced.
      3. Explain how the outsourced project aligns with your overall business goals.
   2. Volume and Scale
      1. Estimate the volume of work involved in the project.
      2. Consider scalability requirements for potential future growth.
   3. Key Performance Metrics
      1. Specify required metrics such as turnaround time, accuracy, and productivity goals.
      2. Define service level agreements (SLAs) for performance expectations.
   4. Project Duration/Time Zones
      1. Specify whether you need a dedicated team for an ongoing project or for a one-time assignment.
      2. Discuss any critical periods or time zones that need special attention such as coverage for specific times of day or 24/7 coverage.
   5. Technology Requirements
      1. Outline any technology stack or tools required for the project.
      2. Share your preferred communication channels or protocols ( e.g. email, SLACK, Microsoft Teams, FTPs etc.).
   6. Share a Sample
      1. Share a sample or prototype of the project to provide a clear understanding of your expectations.
      2. Discuss any specific formats or standards you prefer for deliverables.
   7. Budget
      1. Communicate any budget constraints or limitations clearly.
      2. Discuss any preferred pricing models.
   8. Data Security and Confidentiality
      1. Outline any industry-specific compliance requirements.

***Feel free to download the full, print-ready version of this BPO Project Scoping Template here.  

1. Conduct BPO Interview: Once you have completed the project scoping step, it’s time to interview some prospective BPO providers. To assist in this important process, we have compiled a comprehensive BPO Evaluation Checklist. Use this checklist as a strategic tool to ensure a thorough and informed evaluation. 

**Feel free to download the full, print-ready BPO Interview Questionnaire Template here. 

1. BPO Final Selection: As you review and evaluate the data points gathered during the interview and sampling process, below are some considerations that may help you make your final decision:
2. Prioritize Compatibility–At the end of the day you want a BPO Partner; one that will work with you, grow with you, and act as an extension of your team. Before making your decision, ask yourself the following questions:
   1. Did my team enjoy collaborating with the BPO during the evaluation process? Is this partnership a good fit with our company culture?
   2. Was the BPO firm responsive and supportive during the evaluation process? 
   3. Did the BPO teach me something I did not know, or make a recommendation to help improve my process?
   4. Do I feel that this BPO will be a good steward of my data, my systems and my brand?
   5. Am I excited about working with this BPO?
3. Beware of BPO Red Flags–There are lots of BPO companies out there. It can be tough to distinguish the good providers from those that are simply good at marketing themselves. Protect your organization by keeping a lookout for some of these red flags: 
   1. 1. New or Rapidly Expanding BPO Firms–New offshore BPO’s launch every day, often with little expertise. Instead, look for established firms that have a bank of experience, a readily viewed portfolio, and a long history of satisfied clients.
      2. BPOs with High Turnover Rates–The BPO sector has notoriously high turnover rates. A BPO partner with consistently high employee turnover can negatively impact the quality and consistency of the services provided. Beware of BPO’s that are not willing to share their turnover rates. This may indicate issues with management or work culture. 
      3. BPOs with Inadequate On-shore Communication Channels–Businesses have a lot of ways to stay connected–email, SLACK, Microsoft Teams, etc. But nothing beats the ability to connect live and work directly with a local partner. Seek out a BPO company that prioritizes onshore support. High-touch local support can help you avoid misunderstandings, delays, and frustration in the collaboration.
      4. Affordability Over Quality–Avoid making a BPO selection primarily based on price. Price matters, but it’s only one of several factors you need to take into account. Your BPO partner should offer the right balance between cost control and quality. Paying less up front won’t result in long term savings if you’re forced to switch vendors down the line because of poor quality or unresponsive support.

Selecting the right BPO is important, but that doesn’t mean it has to be difficult. You simply must be strategic in your approach. As you navigate the process of choosing the right BPO partner, it’s essential to weigh not only the quantitative aspects but also the qualitative elements that contribute to a successful collaboration. 

Seek that authentic fit – a BPO partner that not only aligns with your operational needs but feels like an extension of your team. Reflect on your team’s experience during the evaluation process and choose a BPO that ignites excitement about the prospect of collaboration. 

Use this guide, and the tools provided within, to explore the BPO landscape with confidence, to consider all of your options, and to ultimately select the right BPO partner for your business.

BPO Project Scoping Template

Project Scope

• Summary of the project and objectives: 
• The specific tasks that need to be outsourced are as follows:
• This outsourced project is important to our business because 

Volume and Scale

• Estimated volume
• Expected future growth (if applicable)

Key Performance Metrics 

The required metrics for this project are: (example: 98% accuracy, 30 second turnaround)

_________________________________

Project Duration/Time Zones (Discuss any critical periods or time zones that need special attention including coverage for specific times of day or for 24/7 coverage.)

1. My project is (select one):  One-time Project/ Ongoing project 
2. I need support during the the following days, in the following time zones  (if applicable)__________________

Technology Requirements

Below is a list of project-required technology or tools.

_________________________________

Below are my firm’s preferred communication channels (e.g., email, SLACK, Microsoft Teams, phone, etc.).

_________________________________

Share a Sample

Attached are the relevant process documents and a completed sample of the project to provide a clear understanding of our expectations.

Below are the specific formats that we require for the deliverables.

_________________________________

We prefer to share data via: (example FTP, email, share drives etc)

_________________________________

Budget

1. We have the below budget constraints or limitations.
2. Below are our preferred pricing models.

Data Security and Confidentiality
Our project/industry requires compliance with the following:

1. 1. _________________________________
   2. _________________________________
   3. _________________________________

Client Information

• Company Name
• Contact Person
• Position
• Email
• Phone
• Additional Comments or Special Instructions