September 05, 2023
Following the height of the COVID-19 pandemic, the US continues to experience a shrinking labor market marked by increased demand for talent with a declining number of available qualified candidates. The confluence of a multitude of economic events including a shrinking labor market, rising interest rates, and supply chain instability have led to domination by a few market leaders with a resurgence of M&A consolidations. Renewed spending and acquisition growth have revitalized demand for a contingent workforce that has the experience and process knowledge to fill the voids that remain during the market recovery. However, contingent labor is a short-term solution with a limited scope for a long-term problem of growth and evolving business needs; constrained by the economic fundamentals of supply and demand for talent.
Traditionally, companies have leveraged the use of a Business Process Outsourcing (BPO) service as a long-term resolution to talent shortages. With BPOs, businesses can minimize the impact of high attrition in a market where available workers are scarce by ensuring they have an adaptive, flexible workforce model. The common scope of outsourced services can be broad and range from a few roles within a department to entire functions such as Customer Support, IT Help Desk, Marketing, and Accounting. Research studies have shown that organizations improve their operational and financial performance by transferring non-core business functions to a service partner, while focusing on core competencies. With BPOs, one major advantage is cost savings in employee compensation, infrastructure, and other technology investments as part of the total cost of ownership or TCO. With specialized skill sets and processes, BPOs drive efficiency gains to improve customer and employee experience, while creating a positive impact on the bottom line.
In contrast, in lieu of providing the talent to perform the work, Software-as-a Service (SaaS) provides the software or platform of use and companies provide the talent that maintains responsibility for those functions. Although the company performs the functional scope of work, SaaS solutions provide innovative market specialization in software and processes that can optimize how the work is performed, which leads to a proven ROI in months instead of years. With SaaS, there is scalability for short-term or long-term growth needs, infrastructure reliability with redundancy, security controls to safeguard sensitive data, carefree maintenance, visibility reporting, and simple mobility for access. Employees can work from anywhere, anytime. Instead of investing time, employee, and financial resources to support on-prem environments, companies pay third party subscription fees to use the software, which includes ongoing maintenance.
With expanding cloud adoption, Business Process as a Service (BPaaS) has emerged and combines the best advantages of BPO and SaaS providers to deliver greater horsepower. BPaas provides full process lifecycle management with a BPO service, which is delivered via cloud services and include examples such as IT Managed Services, Accounting, or Payroll Management. Companies are increasingly utilizing BPaaS to automate business processes, offset labor costs, and bolster hybrid workforces amid the new future of work with discretionary spending to preserve cash flow. As such, organizations can invest in their core competencies and outsource non-core functions to third party partnerships, which deliver intelligent automation of business processes to accelerate the journey of digital transformation.