Making the case for business process outsourcing

Business process outsourcing (BPO), or back-office outsourcing, can be a game changer for companies looking to enhance efficiency and drive growth. By outsourcing noncore functions, businesses can achieve significant cost savings, access specialized expertise and focus more on strategic activities.

One of the primary benefits of outsourcing is cost reduction. Outsourcing allows companies to convert fixed costs into variable costs, freeing up capital for investment in other areas. Additionally, BPO providers often have access to the latest technology and best practices, which can lead to improved process efficiency and quality.

Another key advantage of BPO? An increased ability to focus on core business activities. By delegating routine tasks to external experts, internal teams can concentrate on what they do best—driving innovation, improving customer service and expanding market reach. This strategic focus can lead to better business outcomes and a stronger competitive position.

Are you looking to streamline your operations and drive business growth?

Listen to this seven-minute conversation, where RSM’s Jim Cashin discusses how companies struggle to keep pace with the demands around technology evolution and process improvements. Help ensure your business has the right people needed to continually improve, produce and share information so the owners and operators of the business can focus on their core mission to drive business success.

Don't miss out—listen now, or read the transcript below, and take the first step toward optimizing your business processes!

Matt Malone: When you talk about outsourcing, you’re referring to evaluating and performing many different functions across the organization? In other words, it’s not just about technology, correct?

Jim Cashin: Right. First and foremost, it entails evaluating the overall roadmap for a company and the corresponding technology needs. Then, understanding what it takes to support that strategy and that technology.

Beyond that, there are regulatory and compliance issues that are relevant only to particular firms. Privacy and security are clearly two of the issues that are facing all institutions.

Ultimately, when we talk about technology outsourcing, it’s really centered on a strategic plan—how are you supporting your infrastructure and your business applications? Then, tying in those components to ensure that your environment is secure and that you can have a sound infrastructure.

Then, it’s figuring out the business applications that allow for business processes to be more efficient and better automated. That technology should alleviate the need for manual processing and provide real-time information for better business decision making.

When it comes to specific issues like compliance and reporting aspects, we see a lot of outsourcing of internal audit services because of the expertise required given increased regulatory complexity. The experience of a firm like RSM allows companies to do more without the internal burden of salary, benefits, training and other components they would need.

MM: What sort of cost savings should a firm expect from outsourcing these functions?

JC: It’s hard to give a specific answer, because every company is unique. But, on average, a company can save money and that’s not including soft costs, which are often overlooked. Generally, we find that through technology improvement—not just with outsourcing but leveraging newer and better technologies to support the business—there’s a substantial cost savings that companies expect, roughly in the neighborhood of 10% to 20%.

MM: At the firm level, what sort of analysis goes into determining whether a particular organization would benefit from outsourcing?

JC: In a lot of cases where there are small practices performing these functions, it’s hard to keep pace with the technology trends and/or best business processes to employ within a business. A lot of times, there’s a gap that can be filled very easily through leveraging an outsourcing component, whether by co-sourcing to perform certain functions or by outsourcing the functions entirely.

MM: If a firm decides to use an outsourced provider, how do they best ensure a successful partnership?

JC: The biggest thing is putting the effort into the planning phase of the outsourced engagement—to define what the roles are and who’s going to be responsible for each task so that everybody is clear on the deliverables, the timeframes and the key reporting metrics that need to be reported. It’s understanding how the client wants to be communicated with. Without that understanding, a lot of expectations will likely not be met.