Do you want to know how much money BPO businesses make yearly? If YES, here are 7 factors that determine the profit margin for BPO companies.
BPO which is an abbreviation for Business Process Outsourcing (BPO) Services, comprises of individuals as well as enterprises who work remotely as independent professionals, providing a wide range of products and services both to businesses as well as consumers.
A virtual assistant is self-employed and provides professional administrative, technical, or creative (social) assistance to clients remotely from a home office.
Since virtual assistants are independent contractors rather than employees, clients are not responsible for any employee – related benefits such as medical, taxes, insurance and other benefits. Although some clients factor such benefits into the total contract package.
How Do Business Process Outsourcing (BPO) Companies Make Money?
A standard Business Process Outsourcing (BPO) Services company make money by offering some or all of the following services;
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Customer support services
24/7 inbound/outbound call center services that address customer queries and concerns through phone, email and live chat.
2. Technical support services
Installation, product support, running support, troubleshooting, usage support and problem resolution for computer software, hardware, peripherals and internet infrastructure.
3. Telemarketing services
Interacting with potential customers and creating interest for the customer’s services/ products. Up-selling, promoting and cross selling to existing customers and completing online sales processes.
4. IT help desk services
Level 1 and 2 multi-channel supports, system problem resolutions, technical problem resolution, office productivity tools support, answering product usage queries and performing remote diagnostics.
5. Insurance processing
New business acquisition and promotion, claims processing, policy maintenance and policy management.
6. Data entry and data processing
Data entry from paper, books, images, e-books, yellow pages, web sites, business cards, printed documents, software applications, receipts, bills, catalogs and mailing lists.
7. Data conversion services
Data conversion for databases, word processors, spreadsheets and software applications. Data conversion of raw data into PDF, HTML, Word or Acrobat formats.
8. Bookkeeping and accounting services
Maintenance of the customer’s general ledger, accounts receivables, accounts payables, financial statements, bank reconciliations and assets / equipment ledgers.
9. Form processing services
Online form processing, payroll processing, medical billing, insurance claim forms processing and medical forms processing.
10. Online research
Internet search, product research, market research, surveys, analysis, web research and mailing list research.
Please note that a Business Process Outsourcing (BPO) services company can also make money by specializing in any of the areas listed below:
Types of Outsourcing Services a BPO Company Can Specialize in
a. Offshore Outsourcing
Also known by the related term ‘offshoring.’ Offshore vendors are located in foreign countries. For example, a company in Canada can hire an offshore virtual assistant from Nigeria or India.
b. Onshore Outsourcing
Onshore vendors are located within the same geographic borders as the company but may be positioned in a different city or state. For example, a company in Dallas, Texas hires a provider in Los Angeles, California to perform non-core processes.
c. Nearshore Outsourcing
Nearshore vendors sit in bordering and neighboring countries to that of the company. For instance, business process outsourcing services in the Canada and Mexico are considered nearshore vendors to the United States.
It is important to point that there is no one mold-fits-all when it comes to how much a Business Process Outsourcing (BPO) services company in United States of America is expected to make. This is because there are some factors that we are going to look into before giving an estimate of how much an average Business Process Outsourcing (BPO) services company – business make yearly and these factors are;
7 Factors That Determine How Much Money BPO Companies Make Yearly (Profit Margin)
1. The Capacity of the Business Process Outsourcing (BPO) Service
One cannot conveniently state the amount a Business Process Outsourcing (BPO) service is expected to make yearly if you do not know the capacity of the company. As a matter of fact, you cannot equate the amount a Business Process Outsourcing (BPO) service that is just starting out in business with a well – established business that offers robust remote services.
2. The Location the Business Process Outsourcing (BPO) Service is Covering
We must not rule out the fact that the location the Business Process Outsourcing (BPO) service is covering is a major factor that will determine the amount he or she is expected to earn monthly.
The truth is that you will struggle to make good money as a Business Process Outsourcing (BPO) service if you locate the business in an area filled with low income earners or in a ghetto. If you locate your Business Process Outsourcing (BPO) business close to a highbrow area or an area with loads of business, you are likely going to make good returns from the business.
3. The Management Style of the Business
Another key factor that will determine the amount a Business Process Outsourcing (BPO) service is expected to make yearly is the management style of the business. Trust me, the results you will get when you are good manager will definitely be different from a Business Process Outsourcing (BPO) service with a poor manager will make.
The idea is that a good Business Process Outsourcing (BPO) service will not just retain their old customers, they will also keep getting new customers especially through recommendations and that no doubt will greatly influence the amount they make annually.
4. The Business Approach of the Business Process Outsourcing (BPO) Service
There are different business approaches that a Business Process Outsourcing (BPO) service can choose from and no doubt it will greatly influence the amount they are expected to make monthly and yearly. Of course, we know that a Business Process Outsourcing (BPO) service may decide that they want to work alone and do their marketing alone and they can also decide to partner with other businesses that will recommend clients to them.
It is easier to find Business Process Outsourcing (BPO) service partnering with call center operators and key players in the manufacturing industry and other related industries. In essence, a well – organized Business Process Outsourcing (BPO) service that works with others will surely make more money than a solo Business Process Outsourcing (BPO) service.
5. The Advertising and Marketing Strategies Adopted by the Business
Another key factor that will determine the amount a Business Process Outsourcing (BPO) service can make yearly is the advertising and marketing strategies adopted by the management of the Business. Trust me, there are several advertising and marketing strategies that can help a business increase their earnings, but you may be expected to spend more.
But the results you will make will far outweigh the amount you spent on advertising and marketing. Of course, you don’t expect a Business Process Outsourcing (BPO) service that is engaging in aggressive advertising and marketing to make same amount yearly with a Business Process Outsourcing (BPO) service that is passive with its advertising and marketing.
6. The Number of Years the Business Process Outsourcing (BPO) Service is in Business
Lastly, another key factor that will determine the amount a Business Process Outsourcing (BPO) service is expected to make on a yearly basis is the number of years the company is in the industry.
In business, the number of years you are in existence will go a long way to determine the amount you will make especially if the business is well – managed. This is so because over the years, you would have been able to gain the trust of your customers and it will be easier for you to have them come back and also recommend clients to you.
For example, in your first fiscal year (FY1) you might make two hundred and fifty thousand dollars ($250,000), in your second fiscal year (FY2) you might make five hundred and fifty thousand dollars ($550,000) and in your third fiscal year (FY3) you might make seven hundred and fifty thousand dollars ($750,000).
Estimated Profit Margin of BPO Companies
Business Process Outsourcing (BPO) services can to a large extent determine their profit margin. Having said that, between 2012 and 2016, the global business process outsourcing (BPO) industry grew at a compound annual rate of 4.4 percent to reach total revenue of $140.3 billion in 2016.
Despite Trump’s new policy claims, the Asian BPO Industry continues to expect unstoppable growth. According to PR Newswire, the Filipino IT-BPO industry is expected to experience a compound annual growth rate of 11.5 percent in revenue between 2018 and 2023.
With an expected growth rate of 7 to 8 percent for export revenues by 2019 and an additional 130,000 new jobs, digital adoption will help increase the sub-sectors in the BPO industry.