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 identifies a process necessary for its operations but not part of its core value proposition in the marketplace.

 

Processes performed in the same or similar way from one company to another, such as payroll or accounting, are candidates for business process outsourcing in Mexico.

 

Because these basic processes generally do not differentiate one organization from another, company executives often determine that there is limited value in having their 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 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.

 

Administrative functions, sometimes called internal business functions, include accounting, information technology (IT) services, human resources (HR), payment processing, and quality assurance.

 

Front-office functions include customer relations, marketing, and sales services.

 

BPO contracts can involve outsourcing an entire functional area, such as the HR department, to a single vendor. Organizations also often outsource specific processes within a functional area. For example, an organization may outsource its payroll but perform all other HR processes.

 

 

Commonly outsourced processes include the following:

• Accounting
• Administration
• Customer Service and Call Centers
• Human resources (HR)
• IT services and management
• Marketing
• Research
• Sales

 

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.

 

For businesses large and small, the range of functions and services offered by the business process in Mexico has significantly expanded over the past few decades.

 

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 procedures and then determine whether it makes sense to outsource them. 

 

If so, the organization must search for the best supplier for the job and move the work from the internal to the external supplier.

 

Outsourcing requires a lot of change management, as switching to an outsourced provider typically impacts existing staff, established processes, and workflows.

 

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 outsourced.

 

What are the benefits?

 

In its 2020 Global Outsourcing Survey, Deloitte found that companies use BPO to meet the following objectives:

 

• 70% of business leaders surveyed cited cost savings

 

• 40% Cited flexibility

 

• 20% Cited speed to market

 

• 15% Cited access to tools

 

 

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 can modify the execution of outsourced business processes, enabling agile responses to market dynamics.

 

Greater competitive advantage. BPO allows an organization to focus more resources on operations that distinguish it in the market.

 

Higher quality. 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, which means they are more likely to invest in new technologies for improved speed, cost, 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 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 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 and data privacy needs.

 

• Reporting metrics to demonstrate that you are meeting contractual standards.

 

Conclusion

 

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 and reduces time zone differences.

 

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.