Business Process Outsourcing in the Retail Energy Space: The Power of Letting Go

By Annie Beers

According to the Society for Human Resource Management, 40-80% of the gross revenues for most businesses are spent on employee costs, including salaries and benefits.  Once training and employee turnover are factored into business cost, it’s possible for a company to retain only 10% of it’s revenue or worse yet, to be left with an overall deficit due to overhead cost.  But what happens when a company can dedicate more of its budget to generating revenue?  Profits increase.  How do savvy companies make that happen?  They reduce operating costs and prioritize their marketing and sales departments. 

One effective way to accomplish this is by utilizing a BPO (business process outsourcing company).   BPO’s are available to meet many business needs, including operations, finance, and even customer care.  Whether it’s for a start-up or an established, publicly traded company, the right BPO provides cutting edge, economical solutions for businesses.  In the retail energy space, where de-regulation is still considered a relatively new initiative and where new markets are popping up frequently, business process outsourcing makes great sense. 

Many new Retail Electricity Providers (REP’s) are in a time crunch for speed to market.  They need to get certified, set up payment vendors, and choose the best billing system for their needs. These are just a few of the first steps to starting a REP.  Depending on the BPO provider, they can assist with every step in this process.  The right BPO provider has integral industry knowledge and great relationships with retail energy vendors and will leverage these to assist a new REP.  Also, a new company has investors, executive leaders and management, but usually lacks the day-to-day workers needed to operate functionally once the business is live.  Again, the right BPO provider will put industry SMEs in the needed roles, with little training needed.  New companies need brick-and-mortar (office space) when they start a business.  The size and cost of that space is determined by how many employees will be in that office.  The right BPO provider will include this in the cost of business or better yet, they will utilize the more cost-effective and on business trend, remote working.

BPO’s are often the right choice for a new REP.  But what about an established REP that’s simply looking to create efficiencies and decrease operating cost?  Ultimately, isn’t that the goal of any for-profit business?  As is the case for new REPs, the right BPO provider can assist with New Market Entry for those markets that are newly deregulated, again using industry expertise and vendor relationships.  Often, established REPs find glaring inefficiencies during internal audits or when analyzing company metrics.  Again, the right BPO provider can assist in analyzing these inefficiencies and proposing budget-friendly solutions that include system conversions or upgrades as well as workforce transitions.

As Phil Fersht, founder and CEO of Horses for Sources Research, explained in a blog post, since BPO providers nowadays are essentially consultants that offer solutions in the form of smaller operational changes, they’re directly adding value to their client’s’ bottom line.  In today’s business climate, BPO services are considered partners with a vested interest in the success of their clients. The improvements that they seek to drive – whether it’s making tech support more efficient or making customer service better – will impact the bottom line in the form of more productive workforces.

Every company has people invested (literally or figuratively) in its success.  In the retail energy space, success isn’t measured only by the bottom line.  Success looks like profit, but it also looks like a loyal customer base and a positive influence on the competitive energy market.

The right BPO provider gives the client the power to let go of the day to day and focus on growth.

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Annie Beers is the VP of Operations at SmartBPO, LLC.