Optimizing Business Process Outsourcing with Automation
By Joshua Widener, Senior Intelligent Automation Analyst, Marcum Technology
The global business process outsourcing market is expected to grow by a massive $230.2 billion by 2027.1 While a significant percentage of this growth will be captured by global integrators, there remains considerable opportunity for smaller outsourcing firms to enter the market. To compete in this price-sensitive and highly competitive market, outsourcing firms need every competitive advantage. With the recent advances in automation, there is finally an opportunity to gain that advantage.
What is Business Process Outsourcing?
Business process outsourcing (BPO) is a standard practice where an external service provider is hired to perform one or more non-primary business tasks on behalf of their clients. Business functions that are often outsourced include human resources, customer call center, payroll, accounting, data analytics, direct marketing, and many others.
Business Process Outsourcing at Any Scale
Contrary to popular belief, business process outsourcing does not have to be executed on a large enterprise scale. Again, think of your accounting firm, tax preparer, or HR outsourcing firm. They may deliver outsourced services to small and medium-sized businesses. These services could mean the difference between hiring one or more full-time employees or simply using the third-party service provider on an as-needed basis. In fact, a recent survey found that small businesses most commonly outsourced their more technical tasks, with 37% outsourcing accounting, 37% outsourcing IT services, and 34% outsourcing digital marketing.2
Other benefits of outsourcing include:
- Flexibility for an organization to select the most appropriate services to be outsourced.
- Access to the latest technology and reporting tools (prompt and accurate reporting).
- Increased efficiency of outsourced business processes.
- Current staff can focus more on analytics and other important business processes.
To take full advantage of outsourcing at a cost-effective price while still receiving excellent, responsive service, it is imperative that the vendor you choose is an expert in business process automation. Ask them about their ability to scale and deal with increased volume as your business grows.
Consider this case study. An up-and-coming West Coast law firm relies heavily on outsourcing to provide a broad range of services. This translates to more than 1,500 invoices per month from more than 100 vendors. With a small internal A/P team, the firm was unable to handle the sudden increase in volume. The invoices not only have to be loaded to an ERP system to get paid, but they also have to be tracked in case management systems so the firm can properly account for its expenses. By outsourcing many of its legal functions the firm resolved a bottleneck on one side of its business, but it caused another in the accounts payable department. Can you imagine a small team trying to handle this on a monthly basis? It is very easy to get overwhelmed with the day-to-day processing. This particular process is ripe for automation using available technology to streamline invoice extraction, approval, and posting into the various required systems. By outsourcing the accounts payable function, the firm was able to keep up with its growth and maintain quality at the same time.
By implementing intelligent process automation into its outsourced process, the firm now has an automated process that:
- Downloads the invoice attachments from email.
- Extracts the information from the invoices itself.
- Loads the invoice into its ERP system.
- Loads the case information into its expense system.
This increases how quickly invoices are uploaded and reduces errors that stem from manual data entry. Now the firm can easily handle 1,500 invoices a month with a small team.
What is Business Process Automation and Why is it Important?
Business process automation (BPA) is the process of automating business processes by using technology to transform manual, repetitive tasks into hands-free operations. One of the greatest benefits of using business process automation is the proven increase in employee satisfaction, which is so critical during the “great resignation.” According to a CIO report, “When employees spend more time on the interesting and rewarding aspects of their jobs, productivity and satisfaction rises and—by extension—so does employee retention.”3
Business process automation can also improve efficiency within an organization by saving money and time; increasing transparency; reducing errors; and improving data security. All of these benefits translate to more satisfied clients.
While business process outsourcing and business process automation are not the same, there is certainly an overlap between the two — and automation is essential to maximize an organization’s return on investment.
BPA and BPO: A Dream Come True for Small- and Mid-Sized Organizations
Many large organizations begin automating business processes by tapping an internal department (or center of excellence) to identify which processes need to be automated, build the new processes, and manage the automation once it is developed. But what about small- or medium-sized organizations that cannot efficiently hire additional employees to optimize their business processes?
With recent advances in automation technology, the traditional barriers to entry (cost and skill) have been significantly reduced. Through a combination of AI, machine learning, and robotic process automation (RPA), intelligent automation (IA) was born. Thanks to low-code and no-code solutions, many of these capabilities are available to non-programmers and business analysts, which broadens the reach and accessibility.
What if your staff could gain access to these new technologies to create your own process automation? Think of the possibilities.
Consider the case study of a culinary company that provides outsourced food services to colleges and universities across the United States. The company purchases food from more than 35 vendors. Each individual chef uses an online ordering system to coordinate the ordering and receiving.
Back at the head office, the accounts payable team consists of a single employee. Vendors either email invoices or download them from a website. Once all invoice data is downloaded or received, the data must be compiled and reconciled to the online ordering system. Finally, the data is uploaded to the ERP system. This happens on a weekly basis, leaving the A/P employee with little time to complete other tasks and responsibilities.
Now, consider the benefits of using BPA to solve this resource challenge:
Using a series of automation tools, including intelligent process automation and Excel macros, the company implemented an automation to run at the same time every week to complete the payables reconciliation. The process includes handling inbound invoices via email or retrieving them automatically from vendor websites. The process then automatically matches invoices to receipts and generates an exception report for mismatched items. All of these tasks are completed without human intervention. Once the A/P team corrects any exceptions, a final reconciliation is completed and the invoices are automatically loaded into the ERP system.
Developing an automation to handle a time-consuming manual process can improve a company’s efficiency across many functions while maintaining a level of employee satisfaction that could mean the difference between losing a great employee and retaining them to focus on other high-value initiatives.
Whether you are an outsourcing provider or a consumer of outsourcing services, combining business process outsourcing with business process automation correlates directly with an increase in profitability for your organization.
At Marcum Technology, we understand the need for businesses to stay at the forefront of innovation.
As your trusted advisor, our goal is to provide you with the cutting-edge resources that help you streamline your work processes while delivering the best possible return on your investment. For more information Ask Marcum Technology at [email protected].