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Business process outsourcing in Mexico
What is business process outsourcing in Mexico (BPO)?
Business process outsourcing in Mexico (BPO) is a business practice in which an organization hires an external service to perform an essential business task.
Typically, an organization first identifies a process necessary for its operations but not part of its core value proposition in the marketplace. This step requires a good understanding of the processes within the organization and solid business process management.
Because these basic processes generally do not differentiate one organization from another, company executives often determine that there is limited value in having their own staff perform them. Companies calculate that outsourcing these processes to a company specialized in these processes could offer better and more economical results.
BPO has its roots in the manufacturing industry. Manufacturers hired outside vendors to handle parts of their supply chains after determining that vendors could bring more skill, speed, and cost efficiency to that process than an in-house team could. Over time, organizations in other industries adopted the practice.
Now, business process outsourcing in Mexico has expanded so much that organizations of all types—for-profit businesses, nonprofit organizations, and even government agencies—are hiring BPO service providers in Mexico and around the world to carry out numerous processes.
What is Business Process Outsourcing in Mexico Used For?
Organizations engage in business process outsourcing for two main areas of work: back-office functions and front-office functions.
Front-office functions include customer relations, marketing, and sales services.
BPO contracts can involve outsourcing an entire functional area, such as the human resources department, to a single vendor. Organizations also often outsource specific processes within a functional area. For example, an organization may outsource its payroll process but perform all other human resources processes itself.
Commonly outsourced processes include the following:
- Customer Service and Call Centers
- Human resources (HR)
- IT services and management
A survey from Clutch, a business-to-business research firm, found that small businesses most frequently outsource their more technical tasks, with 37% outsourcing accounting, 37% outsourcing IT services, and 34% outsourcing digital marketing.
In addition to non-core functions, some companies outsource strategic tasks, such as data mining and data analysis, which have emerged as essential elements for maintaining a competitive advantage in a digital economy.
How does BPO work?
Business executives choose to outsource a business process for a variety of reasons.
Those reasons vary depending on the type of organization, the age and size of the organization, market forces, and economic conditions.
Startups, for example, often need to outsource back-office and front-office functions because they need more resources to develop the staff and support functions to perform them in-house.
On the other hand, an established company may choose to do business process outsourcing in Mexico for a task it had been doing after an analysis determined that an outside service provider could do the job better and at a lower cost.
Management experts advise company executives to identify functions that can be outsourced and then determine whether it makes sense to move that task to an outsourcing provider.
If so, the organization must go through the process of identifying the best supplier for the job and moving the work from the internal to the external supplier.
This requires a lot of change management, as switching to an outsourced provider typically impacts existing staff, established processes, and workflows.
Switching to an outsourced provider for business process outsourcing in Mexico also impacts the organization’s finances in terms of shifting in-house function costs to outsourced providers and corporate tax and reporting requirements.
The organization may also need to invest in new technology to enable a seamless workflow from the organization to the outsourced provider, and the scope and cost of that technology product will depend on the function being outsourced and the technology’s maturity. This can affect the existing infrastructure in both companies.
What are the benefits?
In its “2020 Global Outsourcing Survey,” Deloitte found that companies use BPO to meet the following objectives:
- Cost savings were cited by 70% of business leaders surveyed.
- Flexibility was cited by 40%.
- Speed to market was mentioned by 20%;
- Access to tools and processes was cited by 15%, and agility by 15%.
BPO benefits typically cited by proponents include the following:
Financial benefits. BPO providers can often perform a business process at lower costs or save the company money in other ways, such as tax savings.
Improved flexibility. Contracts for business process outsourcing in Mexico can modify how an outsourced business process is performed, allowing companies to react more agilely to changing market dynamics.
Greater competitive advantage. BPO allows an organization to focus more resources on operations that distinguish it in the market.
Higher quality and better performance. Because business processes are their core business, BPO providers are well-positioned to complete work with greater accuracy, efficiency, and speed.
Access to innovations in the business process. BPO providers in Mexico are more likely to be aware of advances in the process areas in which they specialize. That means they are more likely to invest in new technologies, such as automation, that can improve the speed, cost, and/or quality of work.
Expanded coverage. Organizations that need 24/7 call center operations can quickly obtain that capability by engaging a BPO provider with 24/7 capabilities and multiple geographic locations, allowing a business model that follows the sun.
How to Choose a Provider of BPO in Mexico
Business executives must select BPO providers that can support their business objectives and help them become more agile, flexible, faster, innovative, and ultimately more competitive.
According to executive advisors and management consultants, organizations should consider more than just the price of a BPO contract when choosing a provider. They should also consider how well the provider can meet those other points, evaluating each provider to determine if it has the following:
- Adequate knowledge of the organization’s business and industry.
- The ability to meet current requirements and the scale to meet future needs.
- Understanding and ability to meet regulatory and compliance requirements and data privacy needs.
- Reporting metrics to demonstrate that you are meeting contractual standards and
- geographic locations to meet business needs and/or regulatory requirements.
Business process outsourcing in Mexico offers many benefits and advantages for companies seeking cost-effective and efficient solutions. Firstly, Mexico’s strategic geographical location makes it an ideal outsourcing destination for companies in North America. Proximity to the United States allows for more accessible communication and collaboration, reducing time zone differences and enhancing responsiveness. Additionally, Mexico boasts a skilled and bilingual workforce, making it easier to provide customer support and handle back-office tasks for English-speaking markets. Cost savings are another significant advantage, as labor costs in Mexico are competitive compared to the United States, allowing businesses to reduce operational expenses without compromising on quality.
Furthermore, Mexico’s stable economy and favorable business environment create a secure outsourcing environment. Finally, BPO providers in Mexico often excel in industries like manufacturing, IT, and customer service, further enhancing the country’s appeal for outsourcing partnerships. Mexico’s BPO sector presents a compelling value proposition for companies looking to streamline operations and improve their global competitiveness.