Is working in BPO useful

Business Process Outsourcing (BPO) is not the model of the future - but of the present!

Contents overview:

Those who can act strategically without burdening themselves operationally have a clear advantage. For companies, this means above all that they should concentrate on their core processes that differentiate themselves from the competition. So why not outsource those processes that cost companies time and money unnecessarily?

Personnel administration, payroll accounting, company pension schemes, but above all sub-processes such as document processing are predestined for Business Process Outsourcing (BPO).

What does BPO mean?

BPO describes the outsourcing of administrative business processes to external service providers, with the aim of having labor-intensive, non-business-critical processes carried out more efficiently and cost-effectively. Because these processes are part of the core business of the respective BPO service provider.

In contrast to other forms of outsourcing, part of the process organization is outsourced with BPO and not part of the organizational structure in the sense of a complete organizational unit - as often occurs in corporate structures. There are then entire departments that are operated as shared service centers.

Software as a Service (SaaS) and Business Process Outsourcing are also often mentioned in the same breath, but they basically have nothing to do with each other. When looking at the process, there are separate topics. With SaaS, companies buy a software service, process sovereignty and decision-making authority on how the service is used remains with the company.

With BPO, the control and management of the outsourced processes lies with the service provider. Strictly speaking, the contracting company is not interested in which software solution the service provider is using. First and foremost, the high quality output must be guaranteed on time.

The blog post highlights the advantages and differences between SaaS, BPO and on-premises »On-Premises, SaaS or Outsourcing: Do we have a choice? Or are we not driven long ago? «.

BPO: advantages for medium-sized companies

  • Focus and concentration on the core business
  • Access to specialist knowledge and use of the latest technologies
  • Efficiency increase
  • Increase in sales
  • Full flexibility
  • Increase in competitiveness
  • Saving of operating costs

For medium-sized companies in particular, it makes sense to outsource sub-processes in order to reduce operating costs and relieve IT. Additional obligations outside of employee qualifications are no longer applicable and there is room again for exercising core competencies. A well-functioning example from practice is the outsourcing of the complex preparation of invoice data.

High quality invoice capture

Different types of invoices and complex processes are not uncommon in incoming invoice processing. So that everything works together perfectly here, not only legal requirements but also many internal guidelines often have to be met. Special constellations such as special purchases, service invoices, additional costs or price and quantity deviations from the order have different effects on further processes.

In addition, there are also many invoices that require special digital recording and processing. For example, there are invoices that contain images in the appendix: unlike the invoices themselves, these images must be digitized in a high image quality. The processing of foreign documents with regard to taxes and input tax deductions also requires special recording. These are all process steps that cost a lot of time and, in the best case, should not be done by specialists with completely different qualifications.

BPO criteria catalogs

When outsourcing such sub-processes, companies often create catalogs of criteria that determine how the documents are to be processed. Such catalogs also contain special requests that a competent service provider should of course provide: For example, some specialist departments want original systems, but only a copy of the invoices. Still other departments require additional voucher notes for facts defined in advance, which the service provider then provides.

In this context, a well-drafted contract is also helpful. It defines where the data is located, how it is protected, how rights are granted, what happens in the event of a disaster and how data management complies with regulations.

Business process outsourcing in practice

The specialist in sealing technology, REINZ-Dichtungs-GmbH, also relies on outsourcing for the recording and validation of its incoming invoices. Today, the company receives all invoices digitally within a maximum of 48 hours and verifies them in its own SAP inbox for further approval or booking.

“We have recognized that we are saving a lot of resources by outsourcing and reducing our standard activities. In addition, we have reduced the IT server costs and were able to save the optical character recognition software ", confirms Patrick Kreuzer, Head of Finance at REINZ, the advantages of outsourcing.

Of course, the external service provider also takes into account special features at REINZ, such as the validation of Conto-pro-Diverse (CpD) suppliers from around 40 countries. REINZ no longer has to worry about this effort: The employees in accounting or purchasing are no longer burdened with administrative »preparatory work« or have to organize illness or vacation situations personally. The service provider will now take care of that.

E-invoicing in SAP: top service and trust

Another important factor is the cooperation between the company and the BPO service provider. Because BPO is not just implemented and ready, it means constant optimization and continuous exchange. A transparent and good mutual coordination as well as a benevolent togetherness are essential success factors for BPO projects. This is also the case with Mercedes-AMG, the performance and sports car brand from Mercedes-Benz. The Affalterbach-based company has completely outsourced the digitization of documents and processes for incoming invoices.

AMG application support and the service provider coordinate with each other in regular reviews. Where necessary, the entire accounting process - from digitization at the service provider to processing the documents in SAP - is readjusted.

Conclusion: Just reducing labor costs is too short-sighted

Of course, companies should analyze beforehand what added value a BPO project has for them. Anyone who simply wants to reduce wage costs in the short term and outsource processes to supposedly cheaper countries is thinking too short.

Process innovation plays a decisive role in BPO: without process optimization, no processes should be outsourced. It is therefore essential to reorganize the processes internally as well. Here it makes sense to take the help of the external service provider directly, after all, most of them have many years of experience and process competence.

The start of a BPO project must be optimally prepared. It should be clear which tasks are being outsourced and which goals the company is pursuing. BPO affects the entire company, so the existing processes must also be adapted to the outsourcing during preparation.