On request from some followers, a thread on what makes a Call/Centre a BPO.

No, a Call centre is not necessarily a BPO.

I was going to highlight how its structure gives way to exploitation, but I can't bother to do that AGAIN. I just want y'all to know how it works.

BPO stands for Business Process Outsourcing, which is where large companies hire external companies/individuals to carry out some of their essential functions like customer service, HR, payroll, data entry, sales, graphic design and tech support.

BPOs are middlemen, so to speak. Large companies such as Amazon, Delta, AT&T, Comcast etc have huge customer bases, they need hundreds of people to deal with them. They don't have the time to sort through 10s of thousands of applications, and train hundreds of people to work.

So, they approach BPOs we've heard about such as Conduent, Sutherland, Alorica, Concentrix etc (or sometimes these BPOs pitch to the companies, it depends) and agree that the BPO will hire the amount of people Amazon (for e.g.) need to take calls/emails or chats for them...

..., on the basis that the BPO remains wholly responsible for those people, even though the employees are doing work for Amazon. 

This means whereas Amazon would assume responsibility for people they directly hire by giving health insurance benefits and paying them $12/hr for eg

...they don't have to spend all that money on benefits and pay because the BPO is their direct employer and will determine their pay. Amazon has to only pay a retainer which is way less than the amount they'd spend to train and hire directly, outline the monthly/quarterly...

... targets that the site/account MUST meet, as well as train someone from the BPO on Amazon's business practices, who will then train the recruits, and the BPO does the rest.

BPOs, now scoring the contract, have to manage costs to keep Amazon as a client...

...so they choose countries that offer the greatest returns.

They opt for outside of the US because they don't save enough money by paying U.S. minimum wages. Going to select countries allows them to pay at the rates of those countries, while giving citizens employment.

NB: Outsourcing doesn't have to be internationally. Some local BPOs do this for local accounts/companies such as such as Flow and NCB.

You may still be asking why they don't just hire the people themselves. Here is why:

a) It costs money to train people. If they train 1 person to train others, they save the money they'd spend training 10.

b) It's time consuming to interview and shortlist so many applicants. Outsourcing increases efficiency by having someone train and hire for you while you focus on other business functions with neither taking time away from the other.

C) It allows you to approach people who can save you the most money. Amazon (e.g) gives the BPO money to carry out the functions, but they must ensure that profit > expenditure.

To do this, the BPO will normally source land and labour at the cheapest possible cost. That way, they don't have to be spending a lot of money to keep their end of the bargain going. If they can't deliver, they fire the company and go with someone else.

They tend to target countries with high unemployment rates, especially if there are many unemployed graduates and somewhat skilled persons, as well as countries where the minimum wage requirements are markedly lower.

High unemployment rates mean that they can easily fill hundreds of positions for Amazon, because people WILL be applying in droves.

Lower minimum wage requirements mean they can get away with paying say, $3/hr as opposed to $12/hr if they were paying people in America, as long as $3/hr is at or above the minimum wage in the country they're operating in.

Now that we know what BPOs are and what they do, non-BPO contact centres are much easier to explain lol. Almost every large company has one of these. JPS, NCB, Scotia etc.

These companies may have a department, sub-company or job agency that hires the same type of people, however, the company that needs the labour is directly responsible for these employees. It's just like any company putting out a job ad for their own place.

These employees tend to get most of, if not the same benefits other employees of the company gets.

There are some companies worldwide, such as Vistaprint, with contact centres that do go to select countries to save money. However, seeing that they are hiring on behalf of themselves to carry out their own business functions, this does NOT count as outsourcing.

E.g Scotia hires Customer Care reps for their contact center. The employees are considered employees of Scotiabank just like any other person. Whereas someone at Conduent will work on Amazon's account but is NOT considered an Amazon employee. They are employees of Conduent ONLY.

It is also important to note that for regular contact centres, the pay tends to be much better, since the employees are directly employed to the company. Also, minimum qualifications tend to be a little higher.

Drop your questions below if you have any, (or quote, up to you), or if you have anything to add then go ahead