CHALLENGES & LIMITATIONS OF BPO

Despite the huge benefits of outsourcing, there are inhibitors or limitations for outsourcing. They are as follows:

HR related issue :

compliance and regulation.

Service quality :

The offshore BPO industry is not as matured as IT services. This may affect the service quality in some cases.

Data Security:

The most obvious risks in BPO revolve around the access, storage and transfer of data. Compliance with regulations for India and other countries privacy laws – that require financial- services companies to protect the privacy of customer data and prohibits them from sharing it with other entities without permission are driving organizational efforts to secure their data.

Staffing Issues:

BPO industry is suffering from low prices and higher compliance cost. Specially in India where most of the State Governments are raising Minimum Wages and customers contracts are not in line with this cost input. BPO industry also suffers from high attrition and big churn of employees from this industry. This industry should be given special status under the service economy as this adds to a high number of youth employment. The social cost of this industry is too large for any Government to ignore.

Regulatory Issues:

This industry is governed by outdated laws, which were not designed to serve this type of service oriented industry. The association intends to work with key Government Departments to address these specific issues.

Software related Issues:

Every issue related to software.

Financial problems:

This industry needs financial support from Government agencies and foreign funds, who wants to improve employment rate in Indian youths. Industry also wants Government to provide lower interest rate loans for CAPEX and OPEX plans.

Destination Challenge for International Outsourcing projects:

India’s top slot as the favorite business process outsourcing (BPO) destination in the world is being challenged by some Nations like Philippines, Indonesia, Vietnam, Sri Lanka, and others, besides big brother China and other east European countries. The latest to join the league is Bangladesh. India has to remain competitive to retain its market share and advantages.

Riding the low-cost advantage, several of these Countries are making a huge effort to garner an increased share in the growing global BPO, now known as BPM – Business Process Management Market. India’s share in this $186 billion global industry is as big as 36% but the threat of other Countries eating into India’s share is looming large.

There are some other challenges as :

1.Changing Political Scenarios

Political situations in regions of America and Europe can affect the BPO industry drastically. Citizen protests, wars, falling economies, etc. can force the governments to pass certain bills which prevent outsourcing to other countries. This can have a major effect on the BPO companies.

2.Exceeding Customer Expectations

Providing customers with complete satisfaction has always been a difficult task for all BPO companies. Various social media channels and increasing competition in the market has resulted in increasing customer expectations to the roof and proves to be quite a challenge for the BPO industry.

3.Shoestring Budgets

One of the major challenges faced by the BPO industry is the budget. Most of the times outsourcing companies are expected to produce the best results with minimal cost. They are forced to get the maximum out from a limited number of resources.

4.Health Concerns

Most of the outsourcing companies are situated in regions which come under different time zones, hence the resources may be working at all times of the day. This can result in major health concerns among the employees and reduce their efficiency drastically.

5.Customer Attrition

At some point of the project, the client may just terminate the deal and hand over the project to your competitor for different reasons. The cost of such sudden deal termination can be huge and can affect most BPO companies to a large extent.

6.Scarcity of Talent

One of the major challenges in BPO recruitment is to find the right talented workforce to work in the industry. According to a recent survey it was noticed that only a fraction of graduates are actually suitable and ready to work in the BPO industry.

7.Employee Attrition

It is quite notable that the employee attrition rate in the BPO industry in quite high. The companies are not able to convincingly retain their employees for long and thereby suffer huge losses every time they have to train new employees. The cost of hiring a new employee and training that person for the job is again time consuming and expensive.

8.Communication Channels

The number of communication channels has increased drastically over the past decade. People have moved on to social media channels to send messages apart from the usual calls and mails. This proves to be quite challenging for the BPO companies to decide which channel to concentrate on when interacting with their clients.

9.Frequent Disruptions

Call traffic management, poor internet connection, unclear phone lines, power shutdowns etc. may result in disrupting the various processes. BPO companies usually work in 24/7 schedule and are expected to be available at all times. Such disruptions can cost the companies a lot and can be very challenging to the industry.

10.Brand Equity

Brand building is an important task performed by the HR professional. This is one of the common challenges for HR managers. They are expected to provide adequate training and a good working environment, so when they leave the company they are the brand ambassadors of the company. If the employees are unhappy, it can easily lead to negative word-of-mouth, thereby leading to diminished brand equity.