Thursday , December 12 2019

BPO vs. Shared Services: Which one is the best?


Are you willing to entrust your business to BPO services companies or adapt a shared services model? Choosing the right service delivery model is one of the business strategies you must decide with due diligence. What is the definition of service delivery and its importance to your business?

According to TeamQuest, service delivery “assist[s] staff in tailoring services to meet the specific business needs at a price the business can afford.” It aims to centralize business operations that are being repetitively performed by one or two departments to cut the operating costs of the company. The common types of services fall into non-core business operations such as customer service, finance, accounting, payroll, and information technology.

Your service delivery model must be based on your company’s goals, objectives and capabilities. Not because it is trending right now. Two of the common service delivery models or platforms are hiring BPO companies (outsourcing) and shared services. Before you jump into one of these models, Deloitte suggests going thru this feasibility checklist. You must:

  • Understand the benefits of implementing shared services or outsourcing.
  • Determine that your organization matches the profile of an organization that would benefit from a service delivery model transformation.
  • Consider whether your objectives align with the potential benefits of a new service delivery model.
  • Consider other strategic initiatives being planned.
  • Ensure that senior management believes the idea is worth investigating.

Going thru a service delivery transformation is like testing unfamiliar waters. Each has its pros and cons that should be carefully assessed or analyzed.

Shared services model is for conservative companies who want to retain their non-core operations in-house. They either hire new employees or reassign their current employees who possess the knowledge to do the task. One of the advantages of this model is a business can closely monitor the performance and quality of the output of the newly formed department.

However, it has drawbacks as discussed by It usually takes more than a year to fully establish and utilize the said model. Hiring new employees and training them incur costs. There might be a need to install new software or system to accommodate the new unit and that is an additional expense shouldered by the company. The employees who provide the shared services might be in uncomfortable position because their treating their colleagues as their customers.

On the other hand, when you hire the services of BPO companies, you’re inviting outsiders or third party vendors to work for your company. The main reason companies choose this service delivery model is it can save them money, as stated by Entrepreneur. You don’t have to hire new employees and instead you’re non-core operations will be managed by experienced employees. There is no need to install and maintain a new infrastructure because you have an instant access to theirs. All systems are set and you can focus on your core competencies better.

IT Outsourcing News lists the disadvantages of outsourcing your services to BPO companies such as quality control; language barrier and public/employee opinion among others.

Quality control proves to be difficult because of the vendor’s location. This could be solved by ensuring SLA (Service Level Agreement) is met and all possible means of communication is open to both parties. Language barrier could also affect the quality of the deliverables this is why the English language proficiency of the provider’s country must be assessed first. The safest bet is outsourcing to Philippines, India and Malaysia.

How about the opinion of the public and employees? At the first stages of BPO company selection, employees should be made aware of it and include them on the decision-making process as well. Ensure the public (which is also composed of your customers) that this move is not a company takeover or a merger but a way to improve your business. You must ease their worries from the start.

Have you thought of mixing these two together? The non-core operations that must be monitored are handled by shared services division while repetitive tasks go to BPO companies. Or as suggested by, “moving to a shared services model can be viewed as a stepping stone towards BPO.”

Whichever course your company takes, remember it must benefit your business, employees, customers and stakeholders in the end.

About juanserbisyo

Juan Serbisyo is a blog that will give you tips on different business industries, services, and other livelihood news & information to help you optimize you money making opportunities.

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