Outsourcing red flags: Signs you need a productivity intervention

by Liam Martin
BPO productivity

Productivity red flags can be hard to spot. Two forces – the transition to remote work and the rise of quiet quitting – tend to keep the source of productivity problems hidden in outsourcing firms, so only the outcomes are visible.

We recently surveyed outsourcing companies of all shapes and sizes from around the world and learned that a staggering 80% of companies are facing these kinds of challenges. While the outcomes varied, more than two-thirds (69%) could be directly traced back to employee productivity issues.

From BPOs and KPOs to call centers, IT firms and staff leasing agencies, productivity is a priority for 90% of outsourcing companies. 

By focusing on productivity and fostering a culture of continuous improvement, industry leaders can grasp incredible opportunities in a sector tipped to grow to almost $500bn by 2028.

We’ve developed this in-depth guide to eliminate the guesswork, using organizational data to unlock hidden insights and implement productivity strategies. 

free productivity audit

Let’s get analytical

Outsourcing firms have historically been early adopters when it comes to technology for process improvement. They’re also among the most likely companies to employ a 100% remote workforce. But too many have a data blind spot that means productivity strategies, whether it’s digital transformation or employee engagement programs or work-from-home policies, are under-informed. 

Good data is the foundation for continuous improvement. 

That’s why Time Doctor designed a Productivity Audit method that looks ‘under the hood’ to find areas in the organization where employees, processes or resources are underperforming. 

By gathering and analyzing loads of data, we can help to highlight those areas that need attention. Then, once you’ve implemented a data-driven productivity strategy, we’ll help you track the results so you can keep optimizing over time.


Understanding the importance of productivity in the outsourcing industry

What does “employee productivity” really mean?

Outsourcing is fast-paced and high-pressure. When employees burn out, the time and cost to rectify the problem amounts to significant losses that are largely preventable.

Productivity isn’t about extracting every minute of billable time from employees. 

We believe it’s more effective, especially long-term, to adopt a perspective where employee engagement is one of the most significant contributors to productivity. This is backed by research from EY Consulting which found almost 90% of employees felt that empathetic leadership directly related to retention and engagement.

Combined with engagement, and contributing to it, are the conditions that create a high-performing workplace:

  • Streamlined back-end processes
  • Optimal resource allocation
  • Intelligent time and project management
  • Customer centricity

They will help to addressing the BPO productivity problem is about working smarter, not harder.

How do we solve the productivity problem?

Inefficiency has a bad habit of spreading when left unchecked. Outsourcing firms need to become capable of recognizing productivity red flags and intervening early, before small productivity gaps become entrenched issues affecting output, revenue and profitability figures.

In our survey of BPO productivity post-COVID, just 20% of companies claimed they were unaffected by the fallout. However, we’re suggesting the reason behind that claim is more to do with a lack of data than an absence of challenges. 

After employee engagement issues, poor visibility over employee productivity and a lack of analytics or performance metrics were the most prevalent challenges reported by BPOs. Both affected 13% of companies. 

The signs are there. The trouble is that the underlying issue is not always visible to the human eye, which is where tools to measure and analyze employee productivity become mission-critical. 

Can you spot these red flags in your organization?

1. Declining output

A decrease in your team’s output over time signals a persistent productivity problem. It could manifest as fewer completed tasks or projects, decreased sales figures, or a drop in customer satisfaction ratings. For example, declining output in a call center could look like:

  • Fewer calls handled per hour 
  • Decrease in customer issue resolution rates
  • Increase in hold times
  • Declining customer satisfaction scores

Detailed time audits help outsourcing leaders to analyze organizational performance and separate process inefficiencies from the symptoms of employee disengagement.

2. Increased labor costs without increased output

Rising labor costs without a proportional revenue increase is a glaring red flag. This situation may arise when team members: 

  • Spend excessive time on non-essential tasks
  • Struggle with poor time management
  • Are disengaged, disinterested or burnt out
  • Have too much administrative work
  • Lack the required skills or tools to complete their work efficiently

Analyzing labor costs against productivity metrics with a time audit helps to pinpoint processes or systems that are over-engineered or inefficient.

3. Missed deadlines and slow service times

Consistently missing deadlines or failing to resolve customer inquiries in a satisfactory timeframe are strong indicators of underlying productivity problems. Delays lead to dissatisfied clients, tarnish the company’s reputation and result in the loss of future business opportunities.

But when the majority of companies have at least some of their team working remotely, keeping an eye on every stage of the customer journey is tricky. Complex workflows and insufficient tools to manage remote teams can hide inefficiencies. 

Employee productivity software provides granualr data on these workflows, giving managers insight to diagnose and fix issues at the source.

4. Frequent mistakes

Mistakes happen. But they should be the rare exception, not the norm. After all, fixing mistakes costs time and money. Effective quality control starts with identifying the root cause of repeated errors, which, like missed deadlines, means tracing backwards from end-product errors to identify process inefficiencies.

5. Low employee engagement and morale

 Although turnover is natural, our research found that just 13% of outsourcing firms that monitored web and app use reported high attrition rates. This is compared to 33% of companies with no web and app monitoring in place. 

Providing your people with the right tools and support will boost employee engagement, and that starts with understanding what your workforce needs. 

Although this seems straightforward, it’s a radical paradigm shift for an outsourcing industry traditionally focused on growth. High attrition was seen as an “unfortunate necessity” in a sector that defined competitiveness by low-cost, high-volume operations.

Times are changing. The emerging challenges undermining BPO productivity are spurring a stronger focus on culture, well-being and engagement. 

Why are these red flags your wake-up call?

Ignoring these signs can have significant negative consequences for your business. Let’s delve into why these red flags should prompt you to take action:

Decreased customer satisfaction

Missed deadlines, slow service times and recurring mistakes directly impact customer satisfaction. Clients expect timely and high-quality service. Dissatisfied clients may take their business elsewhere, resulting in revenue losses and fewer referrals.

Escalating costs and reduced profitability

Process inefficiencies drive up labor costs and expenses, affecting profitability. Rising costs alone aren’t a sign of unproductivity, but when the investment isn’t met with increased output, you might have a burgeoning productivity problem eroding profits.

Missed business opportunities

Clients seeking reliable outsourcing partners are unlikely to remain with companies that consistently fail to deliver on time or provide quality outcomes. Customer churn puts all the pressure on acquisition, preventing the business from moving forward.

Reputational damage

When reputation accounts for nearly two-thirds (63%) of a company’s market value, as Weber Shandwick reported, the importance of protecting your image is magnified. Quality standards, both for people and products, have the most significant impact on reputation.

Inefficient resource utilization

Inefficiency can manifest as poor time management practices, employees spending excessive time on non-essential tasks, under-resourcing or over-resourcing. Inefficient resource utilization not only hampers productivity but also creates preventable waste. 

Competitive disadvantage

In a highly competitive industry like outsourcing, businesses must operate at peak productivity to stay ahead. Failing to address productivity issues gives competitors a head-start, leading to a loss of market share and missed growth opportunities.

Productivity Audit: The power of intervention 

Business challenges don’t materialize out of thin air. Those companies facing high attrition rates or dealing with a disengaged workforce can do something about the issues – provided they know where to start.

A Productivity Audit is a systematic analysis of a company’s employee, process, system and output efficiency. 

It’s a comprehensive assessment that helps identify hidden red flags and eliminate inefficiencies for good. 

The goal is to gain insights into the underlying factors affecting productivity and develop a roadmap  to address them. 

Using organizational data gathered anonymously from employees, Time Doctor gives innovative companies the information they need to create actionable strategies that boost productivity and reduce waste.

How a Productivity Audit works

1. Defining objectives

A clear understanding of your objectives will guide the audit process and help prioritize the areas requiring attention. Determine what specific areas you want to assess, such as:

  • Workflow efficiency
  • Resource allocation
  • Time management
  • Employee productivity
  • Production bottlenecks
  • Customer support

Clearly defined objectives give Productivity Audits a higher chance of success. Not only do they focus the subsequent stages, but the goals also inform KPIs which are crucial for measuring success in step 6.

2. Data collection

Now the audit process really begins. Using an employee productivity tool like Time Doctor, outsourcing companies collect relevant data to assess employee and process efficiency.

  • Employee productivity metrics
  • Financial data
  • Work logs
  • Project timelines
  • Customer feedback
  • Performance measurements

Time Doctor integrates seamlessly across your organization, gathering detailed data for a comprehensive picture of performance.

3. Analysis and evaluation

Your time audit partner then analyzes the data and insights from a few different angles: 

  • Employee productivity
  • Resource allocation
  • Time management practices
  • Workflow efficiency
  • Employee engagement levels

This evaluation uncovers hidden productivity gaps and bottlenecks that need attention. In most cases, the symptoms are clear (missed deadlines, declining output, poor employee performance) but the underlying issues remain hidden until Time Doctor’s data-driven approach reveals the complete picture.

4. Identifying productivity challenges

The audit team traces productivity challenges back to their underlying cause. These root causes might include:

  • Over-engineered processes
  • Inadequate training
  • Disengaged teams
  • Technology limitations
  • Communication issues
  • Ineffective resource allocation

The goal is to pinpoint the causes of low productivity and understand the factors contributing to the red flags observed within the organization.

5. Recommendations and interventions

In our experience, addressing inefficiencies usually requires a mix of technology, strategy and people power. Productivity Audits provide the data used to build a plan of action.

Based on the findings from the audit, BPO managers can formulate an action plan to address productivity gaps. Depending on the organization’s situation and needs, the resulting actions might include:

  • Business process improvements
  • Workflow redesigns
  • Technology upgrades
  • Employee training
  • Ongoing time audits
  • Performance management strategies
  • Changes in resource allocation

The exact interventions will vary based on the company’s unique needs. It’s important to prioritize the actions, ensure the company’s resources are invested in strategies with the highest potential to improve productivity.

6. Implementation and monitoring

It’s go time. Once the recommendations are accepted and prioritized the organization moves into implementation mode. This involves: 

  • Creating project tracks to implement process improvements 
  • Setting milestones
  • Assigning responsibilities
  • Monitoring progress
  • Tracking performance metrics

(A quick tip: If you’re unsure which productivity KPIs to track, revisit step 1, where we defined the objectives.) 

The strategies should be agile, allowing outsourcing companies to make necessary adjustments along the way. An employee productivity solution like Time Doctor remains an essential component of the tech stack, integrating with business productivity software to measure success. 

What a successful productivity intervention looks like 

Productivity Audits are inherently personalized to the company. Success for a call center looks entirely different to a BPO or virtual assistant’s office, and there is significant variation even within those sub-sectors.

You only need to look at Time Doctor’s client success stories to see this diversity in action.

The crucial ingredient across all these case studies is data. Attempting to fix productivity problems with an outside-in or symptom-first approach will not result in long-term success, only short-term distraction.

Productivity Audits get to the heart of the issue, using organizational data to discover efficiency gaps that aren’t yet visible. The result is a tailored roadmap for strategic intervention.

10 productivity benefits achieved by employee engagement

  1. Reduce turnover by up to 18%
  2. Increase profitability by 20% or more
  3. Minimize hiring and training costs
  4. Retain experience and knowledge
  5. Maintain service continuity
  6. Reduce absenteeism 
  7. Build a better reputation
  8. Encourage innovations to scale growth
  9. Outperform competitors
  10. Raise safety and quality standards

There are many more benefits to boosting employee productivity by addressing disengagement. 

Gallup’s research presents some seriously impressive figures on the long-term benefits. What’s still missing, though, is the key to identifying efficiency and engagement gaps before they become bigger issues.

Wrapping up

Employee productivity is one of the biggest challenges for outsourcing firms today.

We’re here to give you the data you need to find productivity red flags and address process inefficiencies at the source. 

Our Productivity Audit delivers valuable insights that enable you to create an action plan for improving employee productivity, and performance across the board. It doesn’t matter whether you work fully remote, in-office or hybrid; Tiem Doctor will help you catch and fix productivity gaps.

Investing time in a Productivity Audit is a catalyst for improving efficiency, profitability and customer satisfaction. And time really is all you need – our Productivity Audit is free for a limited time. Register here to get tailored insights in two weeks.

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