There are many challenges to pricing BPO services, as the outsourcing company practically absorbs its clients’ costs with the promise of reducing them. This is why it is essential for BPO companies to be able to visualize and properly control their own internal costs.
Especially because it’s an industry with few entry barriers, where competitiveness tends to grow. In such cases, the tendency of organizations in the sector to resort to low prices as a competitive tool must be resisted. Incorrect pricing, neglecting cost information, makes BPO companies highly vulnerable to financial difficulties and compromises the quality of the services provided.
Many management challenges lead companies to adopt cost-cutting measures. In this scenario, costs are generally selected on fronts that supposedly don’t deliver direct value to service users, in an attempt to reduce the impact of these cuts.
However, what we observe in practice is that this analysis is often done incorrectly when not well supported by management models suitable for the activities performed. Therefore, regardless of their niche of specialization, companies that provide BPO services need to implement cost management tools to ensure that their rates are set correctly and to avoid damaging the service when the need arises to reduce costs.
It is essential to establish standards capable of identifying the different costs related to each of the organization’s activities, and then allocate them properly and set prices for the services offered based on the resources they consume. In this way, it is possible to price the BPO service with adequate profit margins and maintain the company’s financial health.
The costs of a business can vary significantly, even within the same sector. However, for didactic purposes, we will illustrate below some of the main costs involved in the operations of a Financial BPO company.
The cost of physical space depends on several factors, such as location, the number of workstations (and the space required for each one), and decompression areas, restrooms, among others. All these factors must be considered as cost generators and the impact of each one on the quality of service provision must be assessed in order to understand when it is possible to reduce costs on this front and when it is worth investing in this sector, even if the relative costs increase.
In the case of organizations working with a remote model, it is necessary to observe the costs generated on other fronts, such as technology, staff allowances, etc.
We present energy costs separately from other infrastructure-related costs because they can be substantial and often offer opportunities for reduction. Depending on the number of employees and workstations, as well as the type of equipment used, energy costs can vary significantly.
Financial BPO companies must pay attention to personnel costs. The activities of each department or customer service cell must have their employee costs carefully tracked, especially since the workforce required to provide a service, when underestimated, leads to a drop in productivity that impacts the profitability of the business.
Here, it is worth noting the importance of listing all the costs of labor obligations, which extend far beyond the monthly salary. Training, vacations, Christmas bonus, benefits, taxes and bonuses need to be accounted for properly so as not to affect the pricing of services.
In this context, it is necessary to establish methods for monitoring productivity and properly estimating the size of the team, so as not to waste resources or underestimate the workforce needed to deliver quality services.
Technology costs can be some of the most difficult to measure and control, as they are not limited to the initial investment in equipment, but also its maintenance, replacement, upgrades, etc. It is also necessary to account for the costs of the software used in the organization’s activities, as well as making the correct relationship between technology costs when assessing the possibility of expanding the team, for example.
Indirect costs are some of the most challenging for organizations because they don’t have such an explicit relationship with the company’s activities. However, tracking and allocating them correctly can be the difference between a profitable or loss-making service for the organization.
Learn more about overhead management!
Here you have seen in general terms some of the main costs to be taken into account when pricing BPO services. However, it is important to note that each organization will have different cost drivers, depending on the various activities carried out internally.
Therefore, correct pricing for BPO, with a guarantee of profitable margins, depends on the application of studies to understand how your organization, with its specificities, applies resources to different activities and services.
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