No need for businesses to face risks alone

COMPANIES can face risk from every angle – be it supply and demand, health and safety, labour relations, or change management.

Non-compliance or failure to mitigate risk can have enormous consequences, but how can organisations mitigate and manage risk without taking too much time away from core business functions? With business process outsourcing (BPO), enterprises can delegate one or more of their non-core, time- or resource-intensive functions to a specialist external provider who owns, optimises and oversees these based on defined, measurable performance metrics.

With such a high legislative compliance burden on most industries, risk mitigation is important from both a strategic and operational perspective, but this is no small ask for most businesses. Considerations like financial risk, liability risk and even reputational risk can be overwhelming, but when a company suffers a reputational loss, it also loses its competitive edge along with customers.

This results in decreased profitability and, depending on the severity of the risk materialising, could even result in an inability to continue operating. Compliance and risk management cannot be ignored or overlooked.

Through BPO, enterprises can relieve the pressure of compliance on their internal resources and benefit from delegating the risk to an external provider when outsourcing one or more of their business functions. Organisations that manage their risk effectively are better equipped to avoid the risk entirely or pre-emptively implement action plans to overcome the incident as quickly as possible to minimise negative impact.

Businesses that do not manage risk and compliance are more likely to miss warning signs and become ill-equipped to handle risk events.

In such cases, organisations have reached a point where the risk is no longer just a risk, it’s an actual problem with moderate to severe effects on the organisation. An inability to roll with the punches leads to process inefficiencies, a decrease in productivity and poor quality products. This leads to poor customer satisfaction, loss of competitive edge and ultimately, decreased profitability.

The biggest drawcard to BPO for businesses is that all risk and responsibility for outsourced functions lie with the BPO provider. In order to effectively outsource risk, it’s important that organisations partner with a BPO provider to verify that their outfit is financially sound, legally compliant and in a position to manage that risk for as long as is necessary.

One of the most significant risks in any business relates to employment, but labour relations is not a function that comes naturally to most companies. As a result, the labour component is one of the most beneficial areas to outsource, not only from a risk perspective but from a cost and efficiency aspect as well.

Change management is handled by the BPO provider throughout, and accountability for the business function is then managed in terms of a service level agreement with measurable performance indicators.

Employment costs move from fixed wage costs to flexible costs based on output, in terms of which workers are paid for meeting productivity targets. Quality risk resides with the BPO provider, which further alleviates the risk of wastage.

This BPO model also offers businesses significant savings when it comes to catering for seasonal dips in production demand, making it easy for the business to scale as needed without incurring additional labour costs or risks.

Choosing the right BPO provider can be a make-or-break decision for businesses.

To avoid making the wrong choice, organisations must look for an established, reputable partner with a national footprint, in addition to being financially sound and legally compliant themselves.

It is also necessary to select a partner that is transparent, as this is necessary to build and maintain a mutually beneficial relationship that results in the effective management of risk while sharpening the competitive edge.