The consulting companies of specialized services, known as BPO (Business Process Outsourcing), have experienced significant growth in Latin America in the last year, which translates into an increase in personnel, of up to 30%. Let’s look at the causes of this phenomenon.
What is Business Process Outsourcing?
BPO stands for Business Process Outsourcing. This is a modality that consists of the outsourcing of an external service company for the performance of certain processes within an organization.
In a particular way, these services may be related to various areas, such as customer service (what the so-called call center); accounting and human resources administration (payroll settlements, personnel selection), and technology services (network installation, data analysis), among others.
Many large companies currently delegate various processes and controls to third parties. Even state-owned companies do this. A recent example of this is the hiring of Sencinet (from Colombia) by the Brazilian state-owned Petrobras to interconnect all its units via satellite.
BPO: a win-win option
The reasons for hiring outsourcing are, in turn, varied. On the BPO side, by working for others you have more chances to grow and, eventually, higher profits, benefiting from the growing complexities in supply chains.
On the part of the contracting company, there can be a noticeable saving: instead of having a staff for a service that you only occasionally require, you pay for what you need and when you need it.
Taking into account that the BPO’s are usually constituted by experts in their areas, an effective and efficient work is ensured. Then, for the organization that hires your services, you can better focus your efforts on productive activities.
Also, the flexibility and customization of the BPO’s service offerings allow them to better meet the particular requirements of companies, adapting to both needs and the changing environment, which in turn helps to reduce risks and increase productivity.
And in the current context, where new technologies have become ideal allies, the exchange between the BPO and the contracting company can take place perfectly from one country to another.
This adds an additional factor related to the competitiveness of wages and salaries. That is, since there are countries where salaries are lower, a foreign company may prefer to hire a BPO for certain tasks, as a way to reduce costs, but without sacrificing the quality of the processes.
BPO will grow by up to 30% in 2022
Given this panorama, no wonder there has been a boom in BPO, especially in Latin America recently. Although the environment of the countries of the region does not always favor business, due to uncontrolled inflation or political instability.
According to a note published in Yahoo Finance, the firms in the sector assure that during 2022 their staff has increased by up to 30%. This publication mentions the case of Argentina, a country in which the BPO sector is experiencing great growth, as it has qualified professionals in law, accounting and other areas, in addition to the already mentioned advantage of lower salaries.
This situation had been brewing even before COVID-19. But it was boosted by the pandemic, since many activities were carried out in-house, first by the companies’ own staff and then by external suppliers, i.e. BPOs.
In this regard, it is interesting to note that, during the lockdown, highly qualified individuals and companies began to offer their remote services as a way to cope with changes in the market and declining revenues.
However, the trend continues to rise, even when such confinement has ceased. This is reasonable, if we take into account that the organizations have already known the various benefits of this modality, previously enunciated.
Thus, companies now hire staff mainly for their core business and they delegate the rest of the tasks, such as accounting and administration, to the BPOS, with which they manage to save up to 40% of the costs.
And what is happening in Latin America is not a singularity. On the contrary, it is a global trend. In fact, according to a report published in Mordor Intelligence, “the North American business process outsourcing market accounts for a significant portion of the global market.”
So, we are facing a booming and constantly evolving activity. Not only have BPOS grown, multiplying their staff by up to 30%, but new businesses are emerging every day to offer a variety of services, according to the needs that are observed, in order to be able to supply the current and projected demand.
Prospects for 2023
By 2023 the prospects are optimistic. In this sense, it is expected that BPOs will continue to grow, they will increase their staff, diversify their services and more and more offers will emerge in this promising sector.
But, as in all life situations, the strengths, opportunities, weaknesses and threats of each sector and each company should be carefully analyzed.
In fact, some strengths have already been mentioned, such as having highly qualified personnel, with management not only of the processes that concern them but of the technologies and the English language, since many contractors come from other markets.
On the other hand, the conditions of the region’s economy may constitute an opportunity or a threat, depending on whether there is growth or if, on the contrary, inflation persists, instability or the rules change. And although BPOs can provide services to other organizations abroad, they are not indifferent to political and economic fluctuations.
Another potential threat pointed out in the Mordor study, cited above, is the increasing competitiveness of artificial intelligence in performing some tasks. Indeed, many large companies are already making significant investments in robotic automation for data analysis and other processes. However, it is still thought that the prospects for BPO in the medium term are good, although sustaining such growth will depend on achieving a balance, which allows them to position themselves and find a good niche.