BPO Pricing: Be Smart, Think Value

A primary reason why many companies use off-shore outsourcing companies is to take advantage of significant labor cost reductions. And the savings can be significant, – 30%, 50%, even 70%, depending on the type of resource and the local labor market.

But, as important as they are, do not overemphasize labor costs. Look at the bigger picture by focusing on value. Here are some things that will help you concentrate on value:

• What is the company’s reputation for quality? What is their service management process? What can they offer in terms of process and systems improvements, if needed? Don’t make the mistake of cutting corners on cost only to be saddled with excessive rework. • What is the quality of the management team? Ask to meet the key managers you would be working with to gauge their management style and expertise and to get a better understanding of their experience. While it is difficult to measure, there is clear value in working with a management team that shares the same values as you. Also, there is clear value in working with a group of experts who are competent and whom you can entrust your business with. • Ask how your resources would be recruited. Resource recruitment, training and management (especially how their performance is managed) are factors that will impact the teams’ productivity. Again, low prices are great unless they are offset by inconsistent performance or lower productivity. • Beware of prices listed on service provider web sites. Often, the prices listed on websites are generic pricing for the lowest grade resource in the market. While this may meet your needs, it is better to get pricing based on your specific job descriptions. Be careful; as they say, “you get what you pay for”. • And finally, when making price comparisons, make sure they are “apples-to-apples”. Request a detailed pricing breakdown that includes wages, personnel costs, other overhead costs, and margins. This is the only way to be sure what you are getting and that the supplier is offering pricing that can be sustained.

Pricing can be tricky if you do not have any experience with outsourcing, which is why we presented you with the tips above to guide you in choosing the right outsourcing partner for your business. Finding a partner that allows you to get the right value for your money is quite challenging but it is an important aspect of outsourcing that should not be overlooked.

I hope you find these suggestions of value. It is good business to find great prices; it is better and smarter business to get great value.

We would be thrilled to hear about your experiences and your opinions on BPO pricing; share them with us!