Written by: Patrick Brown, Executive Contributor
Executive Contributors at Brainz Magazine are handpicked and invited to contribute because of their knowledge and valuable insight within their area of expertise.
Every business aspires to grow and succeed over time. As an executive, you aim to keep your company flourishing. You understand that your workforce is critical to your success. Employees are your most valuable assets because they take care of your business and customers.
However, one problem you might encounter is a lack of staffing. With the global labor shortage in full swing, you'll likely struggle to find expert professionals to support your operations.
One solution to this labor shortage is access to a global workforce through business process outsourcing (BPO). Explore how BPO service providers help companies solve their staffing problems.
How Organizations Address Labor Shortages
Labor scarcity has become a widespread issue worldwide. The ongoing pandemic has exacerbated the problem through what we call "The Great Resignation."
In the United States alone, approximately 47 million employees quit their jobs in 2021 to pursue better work-life balance and flexibility, higher compensation, and improved workplace culture. Today, the country has more than 10 million job openings, but only six million unemployed workers are available to fill them.
To combat labor shortage, companies turn to several recruitment strategies:
Hire Local Talent. To effectively recruit potential candidates in the local area, companies should streamline their recruitment process by setting standard workflow, building networks, and simplifying hiring steps. Actively recruiting through aggressive recruitment approaches also helps fill open positions quickly and easily.
Work With Recruiters. Recruitment firms typically have established networks of skilled professionals and experts in various industries, making it easier for them to find the right candidate for a given position. They also have streamlined recruitment processes, which expedite the hiring process and ensure that the most qualified candidates will apply.
Implement Referral Programs. Setting referral strategies for hiring employees proves effective. Companies can have their recruiters get recommendations from other professionals or industry experts. They can also provide incentives or perks to employees for referring to successful applicants.
Use Social Media and Online Job Platforms: Social media channels (LinkedIn, Facebook, etc.) and job search websites (Indeed, Glassdoor, etc.) are powerful resources for attracting and hiring the best talent. Companies should consistently post job ads on these platforms for brand recognition and talent acquisition.
Leverage Advanced Technologies: Harnessing the power of today's technology, such as applicant tracking systems and data analytics, can give businesses a competitive advantage in recruitment. These tools can help search for prospects, filter applicants, and automate screening processes.
However, these strategies are not enough when the entire country faces a labor shortage, as is the case in the U.S.
In this scenario, tapping into a global workforce is the most viable solution. Globalization can help connect businesses with a diverse pool of talent, providing a much-needed solution to the tight labor market.
In the next section, explore how accessing a global workforce helps with tight labor.
How Globalization Helps With Tight Labor
Amid the pandemic, many U.S. and European companies faced labor shortages. The International Monetary Fund (IMF) reported that most labor markets in advanced economies have become tighter than before COVID-19. Further, Grant Thornton's latest International Business Report (IBR) cited labor costs (57%) as a primary factor preventing business growth.
One reason for tight labor is reduced workforce participation, which means the pool of available job seekers has declined. To circumvent this problem, companies can access a global workforce through outsourcing.
To combat the issue of labor scarcity, countries such as Canada and Australia implement new immigration policies.
In November 2022, Canada announced plans to accept 1.45 million immigrants by 2025, 60% of which trained in healthcare and other in-demand job skills. Similarly, Australia seeks to increase the number of permanent migrants to 195,000 until June 2023. The goal is to assist industries in addressing labor shortages and reducing reliance on short-term local workers.
Both Canada and Australia compete to attract skilled immigrants. However, the United States has temporarily halted immigration legislation as they focus on securing the U.S.-Mexico border.
Access to a global workforce is the best solution for addressing labor shortages. For one, outsourcing helps businesses expand, tap into a skilled workforce, and reduce operating costs. Learn more about the rise of outsourcing in the next section.
The Rise of Outsourcing
Marshall McLuhan first introduced this concept of a “global village” in 1964, claiming that people had become so interconnected worldwide due to technology. Fast forward to 2022, and we've seen how globalization has drastically impacted the world.
Globalization does not only help people interact on a personal level; it also allows companies to do business on a global scale. In particular, outsourcing works by giving companies access to an international workforce, not to mention technology and resources.
Outsourcing has become prevalent. The practice of outsourcing to service providers overseas, also called offshoring, has exploded in popularity. It allows companies to delegate tasks to a third-party service provider for business growth.
The business process outsourcing (BPO) sector has exponentially grown over the years. The proof is in the numbers: The global BPO market is expected to reach $525.2 billion by 2030 at a compound annual growth rate (CAGR) of 9.4%.
According to Clutch, nine out of ten small businesses planned to outsource in 2022. They sought to collaborate with domestic and international partners to:
Access flexible resources (33%);
Improve efficiency and save time (27%);
Work with experts (26%); and
Scale and grow their business (19%).
Thus, outsourced labor offers real value beyond addressing shortages and reducing costs. In the next section, learn how the BPO industry helps companies cope with tight labor.
How Outsourcing Helps Countries With Tight Labor
The outsourcing sector serves various businesses across different industries. Think of knowledge process outsourcing (KPO) or information technology-enabled services (ITES). But no matter the industry, it gives you access to a skilled workforce.
Here are ways outsourcing helps companies in countries with tight labor:
1. Provide Front-office and Back-end Support
Third-party vendors build a team of BPO agents. Before, they would establish contact centers and hire customer-facing employees such as customer service representatives and technical support specialists. But the BPO sector has gone beyond handling front-office functions. Today, they employ back-office agents for customer support and administrative work.
According to Deloitte, IT is the most commonly outsourced business function at 54%, followed by finance (44%) and payroll (32%). Since these tasks require specialization and expertise, outsourcing has become the best method for tapping into skilled professionals. Statista even reported that the global IT outsourcing market might hit $587.3 billion by 2027 at an 8.07% CAGR.
Case in point: We established an outsourced back-end team for a California-based IT and telecommunications company, providing a wide range of administrative and sales support tasks. In two months, the company’s customer satisfaction substantially increased by 92%, while productivity increased by 70%. That proves how a reliable BPO company can help build your back-end operations.
2. Hire and Train Skilled Professionals and Experts
Most BPO companies strive to be globally competitive to serve clients better. They work hard to earn standard certifications for business optimization and regulatory compliance. They set up a stringent recruitment process, hire the right people through the global talent pool, and match them with client needs.
They also provide new and old employees with proper training. The goal is to ensure technical expertise, language proficiency, and cultural integration. Additionally, outsourcing offers diverse talent, which leads to more creative and technical solutions. Global employees offer varied ideas because they all come from different backgrounds.
Let's take the case of AT&T. This wireless management company has been delegating some of its business functions to offshore vendors. For one, our business helped establish a contact center for this company. Ultimately, its market share in Arizona rose to almost 5%, securing 15% of the local market.
3. Provide Access to Advanced Technology and Resources
The outsourcing sector is known for investing in the latest technology. Deloitte identified the top digital enablers as follows:
Robotic automation process (RPA)
Single-instance enterprise resource planning (ERP)
Cloud technology
BPO companies leverage technology to help their clients reduce their labor headcount while gaining a competitive advantage. Conversely, they hire and employ technical experts to help manage technological resources.
Here is how next-generation technology supports businesses:
Automation reduces manual work and accelerates business processes, requiring fewer employees to handle certain tasks.
Artificial intelligence (AI) helps with business forecasting, analysis, and reporting.
Self-service options, such as AI-powered chatbots and interactive voice response (IVR) systems, empower customers.
4. Help Companies Save Money While Improving Performance
U.S. businesses employ offshoring to save on labor costs. In fact, outsourcing can help you cut such expenses by up to 70%. First, hiring onshore employees is more expensive than hiring offshore workers.
The salary of one American might be enough to cover ten qualified Asian employees. Building an in-house team also requires investments in infrastructure, technology, and resources.
But while companies are looking to save money, they outsource to improve their business performance. BPO service providers help improve service efficiency, quality, and productivity. They can achieve this objective by tapping into skilled professionals and training them to be the best.
Another case study on a wireless management company can validate the point above. We set up an IT help desk for this business. After two weeks, it handled 90% of the user requests and resolved issues promptly. In the end, user satisfaction increased by up to 92%, while the company saved up to 65% in labor costs.
Five Best Practices for Outsourcing
Outsourcing proves beneficial in many ways such as by giving access to a global workforce. However, it requires proper planning, critical thinking, and deliberate action. As the CEO, you're responsible for navigating your outsourcing journey in the right direction.
Whether you employ business process outsourcing or people as a service, here are some best practices to implement:
Examine Your Business Operations. Before outsourcing, ask yourself whether you lack staffing or need technical expertise. The goal is to identify improvement areas and your business needs. That will help you decide what processes, functions, or tasks to outsource.
Choose the Right Third-party Vendor. Start by searching online or getting referrals from other professionals. With a list of prospects, narrow your options by focusing on their workforce. Also, consider their BPO track record, technology and resources, outsourcing costs, and business reputation.
Create a Service-level Agreement (SLA). An SLA defines your relationship with your BPO partner. It primarily details your workforce's duties and responsibilities, not to mention your operational objectives and key metrics. This legally binding paper keeps your best interests in mind while protecting both parties.
Foster Constant Collaboration. While you give your BPO partner the liberty to operate, provide them with the utmost support. Create open lines of communication with your BPO agents and coordinate with them regularly. After all, outsourcing means pursuing a business partnership.
Monitor BPO Performance. Obtain and review monthly reports to see your outsourcing progress. If areas for improvement exist, help your BPO partner optimize your operations. For instance, provide your third-party agents with regular training programs and process updates to achieve success eventually.
Final Words
The workforce is the lifeblood of your company, keeping your business up and running. A lack of staffing won't only compromise your operations; it might escalate to a business shutdown. So when faced with a labor shortage, consider tapping into a global workforce.
Take advantage of the outsourcing benefits and follow best practices recommended above. They will help build a robust workforce that will lead to your business success.
Patrick Brown, Executive Contributor Brainz Magazine
Patrick Brown is the founder and CEO of Unity Communications, an award-winning BPO service provider operating globally. As a leader, he has built an international organization that serves clients across the globe, from small businesses to Fortune 500 companies.
With recognition on the Forbes Next 1000 list in 2021, Brown's vision and leadership have made his BPO company a force to be reckoned with in the industry.
But Brown's journey to success didn't begin with Unity Communications. He kicked off his career in the U.S. Navy and eventually rose to the rank of IT director for USS John S. McCain DDG-56. After leaving the military, Brown worked with renowned telecommunications companies such as Cox Communications, Mitel, and XO Communications.
His international exposure, interest in technology, and passion for entrepreneurship led him to start his own business in 2009. And he has since grown Unity Communications into the thriving BPO company it is today.
Despite the demanding nature of running a business, Brown believes in fostering a work-life balance for his employees. He himself also dedicates time to his own family and personal hobbies. In fact, he often competes in sanctioned IRONMAN events throughout the world as a way to acquire goal orientation and develop mental fortitude.
Patrick Brown believes that investing in people, leading a disciplined life, and not being afraid to fail are the keys to success.
