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Offshore outsourcing has become a potent weapon for global companies seeking to improve their financial performance. But many companies have yet to realize the full benefits offshoring can provide-advantages that extend far beyond the cost savings that first attracted their attention.

These advantages are at the foundation of the next phase of offshoring: business process outsourcing, or BPO.

BPO companies such as WNS Global Services operate as an extension of clients' enterprises. We run customized end-to-end processes-such as finance and accounting, insurance claims processing, and market and industry analytics, and bring industry-specific knowledge to each engagement.

Today's outsourcing industry, which is expected to grow by 37% annually between now and 2010, is much more specialized than just a few years ago, largely due to the deep industry expertise provided by leading BPO companies. Management consulting firm McKinsey noted this trend in its May 2006 edition of The McKinsey Quarterly, in which consultant Vikash Daga and principal Noshir F Kakas wrote, "As the offshoring industry matures, some providers are beginning to specialize in service lines in order to cater to new opportunities, from process reengineering to capturing previously unrecoverable revenues."

Companies that take the initiative to choose BPO can not only strengthen their bottom line, they also can improve process quality, increase efficiency, enhance customer service, develop compelling new products and services, and increase revenues.

Quality
Offshore BPO not only replicates processes previously carried out internally, but also performs them better by utilizing highly trained senior managers and associates with industry-specific expertise.

At WNS, we recruit several hundred associates every month-including individuals with industry certification or advanced degrees in travel, healthcare, management, accounting and finance. Associates are matched with assignments based on a highly effective predictive framework and provided with additional training. This approach delivers important value to our clients in terms of reduced program-launch times, better allocation of resources and high-quality performance.

Offshore BPO providers also supply risk-management protocols and redundancies that often are cost-prohibitive if a company attempts to replicate them in-house. Acquiring these capabilities through BPO ensures business continuity, data security and regulatory compliance. In many cases, it also increases productivity, sometimes by as much as 60%.

Efficiency
Improvements in productivity, when combined with 24x7 work capabilities, also enhance efficiency. Capitalizing on the time difference, clients rely on offshore BPO partners to complete overnight projects, such as market data analysis, which enables in-house staff to keep projects moving according to schedule. Moreover, working within a multi-shift, 24x7 structure allows each transaction to be handled more quickly. Efficiencies can be even greater when BPO companies actually redesign processes and, when appropriate, apply specialized technology.

Customer Service
Enhanced customer service is a natural outgrowth of the improved quality and efficiency delivered by BPO. As an example, a North American travel industry client partnered with WNS with the objective of improving customer service by ensuring that its travel partners (hotels, rental car companies, etc.) fully deliver the services promised in the original booking. As an offshore provider, WNS is able to reconfirm bookings and make changes when the right service is not being delivered-tasks that the client can not afford at the home cost base. As a result, the client significantly improved its reputation as a company that truly cares about the customer experience.

Innovation
A decision to embrace BPO also allows companies to focus on innovation by rechannelling executives' time-as well as the saved capital-to develop new products and services. These innovations lead to new revenue sources and further improve the bottom line. One of our clients in the mortgage area, for instance, found that the greater efficiencies resulting from BPO allowed it to develop several new products and create new distribution channels.

Revenue
Additional revenue is generated from each of these four advantages, as well as from specific processes focused on revenue recovery, claims settlement or identifying and correcting errors. For example, a North American healthcare provider relies on WNS to resolve small payment disputes with health insurers, and to collect payments too small in size to merit a home-based collection effort. Previously, these claims were written off, resulting in lost revenues for the client.

So, what does this mean for companies considering offshore BPO solutions?

Cost savings no doubt are important and will continue to be a key motivator in the decision to outsource certain business processes. But to more fully unleash the benefits of offshore BPO solutions, companies also must look at the bigger picture and realize these additional benefits. Moreover, they must be willing to redesign processes and create new business models to maximize these opportunities.

Smart and innovative companies already are exploiting the true power of offshore BPO. Its benefits extend well beyond the obvious. We've only scratched the surface.

Neeraj Bhargava
The author is co-founder and group chief executive officer at WNS (Holdings), the parent company of WNS Global Services