5 Factors that Affect the BPO Industry and Make it More Challenging


As the BPO industry generates more and more revenue and creates new job openings, it becomes very attractive for people, both for the ones who are interested in becoming BPO Partners and the ones who want to offer their skills and knowledge on the open market.

As the BPO industry generates more and more revenue and creates new job openings, it becomes very attractive for people, both for the ones who are interested in becoming BPO Partners and the ones who want to offer their skills and knowledge on the open market.

Companies, established in numerous industries have recognized outsourcing as a valuable method of tapping into top-notch talent, affordable workforce and infrastructures. Benefits such as lower expenses, increased efficiency, reduced turnaround and flexible staffing make outsourcing even more attractive.

But since outsourcing was essentially designed not to know any borders, there are some factors that affect this industry and make it more challenging.

Regulatory Environment

This challenge primarily comes from the very nature of outsourcing – finding experts across the borders that are capable of finishing tasks for your business, but how is this relation regulated by regulatory bodies in each country?

This has been the primary challenge of the BPO industry ever since it started to exponentially grow 15 years ago. The USA was among the first countries that have addressed this new legal issue. Its regulatory bodies have produced many compliance-related documents in order to make a clear legal frame for outsourcing partners and people working in the outsourcing industry.

The European Union’s, the Philippines’ and India’s regulatory bodies are still working on this legal frame. Many new regulations are being implemented, but until this is done, the demand for outsourcing will stagnate.

Read too: Business Process Outsourcing (BPO) Software

Cost of Doing Business

Ever since it started growing, the BPO industry was advertised as a huge money-saving industry. In fact, everywhere you look, you will be able to see a promotion that goes like this – get access to top talent for a minimal cost. Over time, the BPO industry has evolved into a serious revenue-generating industry, but the budget and cost of doing business remain the primary concerns for many outsourcing companies.

Outsourcing companies are expected to provide the best results, while the cost of their services is expected to stay minimal. This puts enormous pressure on the resources of these companies since they are forced to give their maximum, while the budget has to remain the same. This leads us to customer expectations and quality of service provided as the next major challenge.

Customer Expectations and Quality of Service

All industries are affected by one major factor – the customer-centric market – and the BPO industry is no exception. This means that the BPO industry has to provide the best possible results for the clients. In many cases, outsourcing companies also have to provide a consult and maintain constant communication with their clients.

Thanks to social media, clients are now very familiar with the best practices in the BPO industry. This puts tremendous pressure on outsourcing companies, which are now forced to spread their resources as thin as possible to maintain the required level of service quality and revenue.

Customer expectations are especially challenging for outsourcing companies that have just entered the market. They have to compete with established companies by either lowering the cost of their services or decreasing the profit margin to increase the quality of service by hiring the top talent.

These three factors are not only affecting the BPO industry, but they are also shaping it and making it more challenging. As you can see, regulatory compliance is still one of the primary concerns for outsourcing companies, as well as client expectations and budget.

Employee Attrition and Health Concerns

Employee attrition was always one of the primary challenges faced by BPO companies, even the major ones. And as time passes the attrition rates only get higher. It seems that that the BPO companies have yet to find out ways to ensure jobs for their employees.

The scenario repeats itself. BPO companies employ new people, devote time and resources to enable a smooth onboarding process, the market demand for that specific work diminishes, and BPO companies are forced to let go of these employees. This significantly increases the time and money spent on training new employees.

In addition, there are also specific health concerns tied to this line of business. As you know, BPO companies are spread around the globe and they don’t apply any geographical restrictions when it comes to both their clients and employees. This means that people working in this industry may be forced to work on an erratic time table, thus resulting in major health concerns for these employees.

Brand Building and Equity

All of the things that we have mentioned so far impact the branding strategy of the BPO companies and their future on the market. With so many variables in the market, it becomes next to impossible for BPO companies to develop a long-term branding strategy, which significantly slows down the brand equity building momentum.

In any case, these companies are forced to invest so much more than the other ones in their branding efforts if they want to become recognizable on the worldwide BPO market. High employee attrition rates result in many unhappy ex-employees, which increases the chances of negative word-of-mouth.

Maybe this is the reason why there are dozens of BPO companies out there and only a few of them have established themselves as major players on the market.  

In the end, all the players in the BPO industry should consider taking a closer look at the successful BPO companies and try to give their best to identify which practices have helped these businesses succeed. Maybe the solution remains hidden in all the metadata that’s piled up over the years.

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