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Home · bpo learning center · Outsourcing Case Studies: Lessons Learned From Successful and Failed Outsourcing

Dion Jay Tality

• January 21, 2024

Outsourcing Case Studies: Lessons Learned From Successful and Failed Outsourcing

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Running a business is taking a risk. Sometimes entrepreneurs win; other times, they fail. Either way, the outsourcing case studies outlined below share some knowledge to guide you through your business decisions.

Business process outsourcing (BPO) is a double-edged sword. It can help you save time and money while improving your overall efficiency and business productivity. However, it might also lead to disastrous outcomes if not managed properly. So outsourcing is a calculated risk.

Explore the outsourcing projects below to learn more about successfully implementing the strategy.

Lessons Learned From Successful Outsourcing

First off, what is BPO ? It entails delegating non-core tasks to third-party service providers instead of handling them in-house. Companies of all sizes outsource both front-office and back-end operations.

Outsourcing has long been a popular strategy for scaling operations and reducing costs. The industry grew further due to the pandemic. The global BPO market size could grow from nearly $262 billion in 2022 to $525 billion by 2030 at a 9.4% compound annual growth rate (CAGR).

These facts and figures speak volumes about the industry’s market growth. Check out the BPO case studies below to learn how to make the most of outsourcing.

1. Slack: Accessing Experts To Grow a Business

Businesses, regardless of their size, have embraced Slack as a digital epicenter for fostering employee collaboration. What began as a humble messaging startup has rapidly evolved into an indispensable tool for facilitating seamless business communication.

The remarkable ascent of Slack owes a substantial debt to the strategic use of outsourcing. Early on, they enlisted the services of MetaLab, a distinguished Canadian design team, to craft the beta version of their business concept. MetaLab’s invaluable feedback paved the way for a user-friendly tool that swiftly gained widespread adoption.

Through astute decisions such as outsourcing logo design , engaging external teams for mobile application development, and investing in external website development expertise, Slack managed to secure a staggering $250 million investment, culminating in a total valuation of $5 billion in July 2017.

As of 2021, Slack’s valuation had soared to an impressive $27 billion. In 2020, it boasted a user base exceeding 10 million daily users, with projections indicating potential growth to nearly 80 million users by 2025, as reported by Statista. The Slack success narrative serves as a compelling testament to the potent impact of outsourcing on business expansion.

2. WhatsApp: Offshore Outsourcing for Market Expansion

WhatsApp is among the most popular messaging apps globally. It started as a small company with a capital of $250,000 in 2012 and had only 30 full-time employees and five part-timers. As of April 2022, it had over 2.44 billion users in more than 180 countries.

We can attribute WhatsApp’s success to using offshore developers from Russia. Its co-founder, Jan Koum, recognized the engineering talent in this country. Outsourcing allowed the company to focus on core operations and customer support while the BPO team handled the app development services . 

WhatsApp’s offshore outsourcing endeavor helped it reduce costs and build a successful product. Later in 2014, Facebook acquired the company for $19 billion. But while it relocated its third-party contractors to the United States , offshore outsourcing played a crucial role in its business growth and success.

3. CuriosityStream: Integrating Onsite and Offshore Teams

The successful experiences of its industry competitors inspired CuriosityStream, a global media company known for its video-on-demand streaming services, to begin an outsourcing journey.

In 2019, the company made the strategic move of enlisting the services of a team comprising six proficient programmers, entrusted with developing a new feature for its streaming platform. The collaboration with this BPO team not only contributed to an upsurge in viewer engagement but also substantially reduced operational costs.

Andre Silva, the company’s Chief Technology Officer, observed firsthand the transformative impact of outsourcing on their business scalability. Recognizing the potential synergy, Silva advocated for the integration of offshore teams with the in-house workforce, aimed at optimizing operational efficiencies.

Lessons Learned From Failed Outsourcing

BPO can be a valuable tool for companies looking to reduce costs, streamline operations, and grow their businesses. But outsourcing also presents unique challenges and risks that you should carefully manage.

Here is the truth: half of the outsourced projects fail outright or do not meet expectations. Three-fourths of businesses report management issues and hidden costs as culprits for this failure. About half were unhappy with their hired vendors’ performance, while 30% encountered communication problems.

The outsourcing case studies below reveal how some companies had to learn the hard way. You can also learn from them in your pursuit of outsourcing. Check out the BPO case studies below to learn how to maximize outsourcing and minimize risks.

1. Klout: Staying on Top of Privacy and Security

Launched in 2008, Klout was a social media analytics company that measured an individual’s influence. Its founder, Joel Fernandez, launched it through bootstrapping—starting a business with meager capital from personal finances. He already had an offshore team in Singapore, and joined them there for a while to cut operating costs. Three months later, he returned to the U.S. with a working prototype.

Later on, Klout faced a lot of controversy due to its role as a social scoring service. A software vendor, Lithium Technologies, eventually acquired it in 2014. But according to the software company’s CEO, Pete Hess, Klout was not aligned with their long-term strategy as a standalone service. So they had to shut it down.

In hindsight, there were a few reasons Klout failed as a business. For one, it outsourced user data management to third-party vendors and raised concerns about privacy and security. The company could have tapped into expertise and technology to improve its flawed scoring system. 

Lastly, it could have hired a reputable provider to create a more sophisticated tool capable of competing with other analytics tools such as Hootsuite and Buffer. Instead, it submitted to Lithium Technologies and saw its demise due to long-term goal misalignment.

2. PatientDox: Core Operations as the Primary Focus

PatientDox was a cloud-based startup that supplied healthcare providers with software-as-a-service (SaaS) technology. This platform offered secure messaging, appointment scheduling, and patient education tools to improve patient communication and satisfaction.

Despite its promising start, PatientDox’s downfall was due to its outsourcing case . Unfortunately, none of its co-founders had a software engineering or technical background, which led them to outsource. 

However, most of its outsourcing expenses went to product development, depleting its cash reserve and hindering its progress. The company’s third-party teams were also working on several projects simultaneously. They could not prioritize and meet consumer needs.

Further, PatientDox faced competition from other healthcare technology companies. Its poor outsourcing strategies, market changes, and stiff competition contributed to its unexpected demise.

3. JPay: Maintain Business Control

JPay was a technology company that provided services to incarcerated individuals and their families. Its services included electronic messaging, video visitation, and money transfers. This technology became a game-changer for affected individuals.

However, JPay’s success was short-lived. Initially, external developers helped build its infrastructure, technology, and resources. The company hired people in India for quality assurance, Israel for engineering, and China for hardware supplies. Ultimately, offshore outsourcing aided in its business growth and expansion. 

Unfortunately, such rapid growth and expansion overwhelmed Ryan Shapiro, the CEO. He could no longer take control of his company to navigate it in the right direction. In 2018, Securus Technologies, a company providing telecom services to correctional facilities, acquired JPay. However, the acquisition led to job losses and service disruptions for customers.

Unity Communications: Proof of Successful Outsourcing Cases

Unity Communications is an outsourcing company that operates globally, offering different solutions to businesses of all sizes. Since 2009, we have grown to provide front-office and back-end outsourcing services to companies across various industries. 

But as with any business, we also have our fair share of outsourcing failures and successes. What’s important is that we have grown and learned through all these years. We are proud to say our BPO case studies now showcase how proper outsourcing works. 

Explore the following case studies demonstrating how outsourcing can help your business meet its goals.

1. Wireless Watchdog: Developing a Custom SLA for Outsourcing Success

Wireless Watchdogs is an award-winning wireless management company. It faced operational challenges such as staffing and human resources (HR) issues. As its business grew and referral business increased, the need for responsive support staff became evident. 

Unity Communications developed a custom service-level agreement (SLA) to address the abovementioned issues. This contract included key performance indicators (KPIs) to measure outsourcing performance and track task efficiency. Our call center staff also underwent proper training and received management support to meet the target metrics.

In just a week, we managed to move many repetitive tasks to the offline team. This step allowed Wireless Watchdogs’s in-house team to free up their time and focus on core business operations. Ultimately, we exceeded the SLA terms by increasing service efficiency and work quality, not to mention having payroll savings on the side.

2. IT and Telecom Company: Establishing a Back-office Team

A well-known information technology (IT) and telecommunications company contacted Unity Communications. Due to a growing customer base, the company sought help for its back-office operations . It was facing operational challenges, limiting the company’s efforts to acquire new customers.

To address these challenges, Unity Communications helped them establish a back-office team consisting of three members and a project manager. The BPO team handled administrative tasks such as data entry, order processing, proposal creation, and overage reconciliation. 

Further, we tracked the team’s productivity through well-defined KPIs. Ultimately, the company’s productivity and customer satisfaction increased by 70% and 92% respectively in just two months. The company now has a streamlined back-office process that efficiently delivers quality work.

The Bottom Line

Outsourcing is a viable option for improving your business operations. But using this strategy with extra caution and a solid plan is crucial. Consider the case studies of different companies presented here to learn a thing or two.

Remember to weigh the potential benefits and risks of outsourcing. Examine your current business operations and search for outsourcing partners. More importantly, hire the BPO service provider best suited for your business. With these, you can avoid the pitfalls of failed outsourcing and reap the benefits of successful outsourcing.

Ready to take advantage of outsourcing without risking your business? Reach out to us, and let’s connect ! Unity Communications is ready to handle the nitty-gritty tasks while you focus on achieving your goals and growing your business. 

We Build Your Next-Gen Team for a Fraction of the Cost. Get in Touch to Learn How.

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6 Case Studies Proving You Should Outsource IT Development

For many years IT outsourcing has been a popular option among technology companies. Nearly 57% of global companies hire offshore developers seeking to focus on their core business activities. 

Besides multiple successful cases of outsourcing by big companies, many startups still beware of outsourcing web development overseas for trust and delivery concerns. However, the practice of big players shows the reality of outsourcing is wholly different. 

In this article, I want to use some successful cases of outsourcing among big companies to disrupt some misconceptions and deduce some lessons that cofounders can follow. So let us start!  ‍

Slack: Outsourcing is a Choice of Early-Stage Startups

Slack is  a real-time office collaboration tool featuring chat rooms (channels) by topic, private groups, and direct messaging. Needless to say, that now this is one of the most popular tools for business communication with nearly 12 million daily users (as per 2020), and this number is expected to reach 79 million by 2025.  

At the same time, Slack stands out as an example of the most successful outsource cases. In fact, in a bid to save raised funds, the company outsourced design and app development services from the very beginning. Relying on outsourced workforce, Slack managed to get 15,000 users during 2 weeks after launch and to become a startup unicorn in 2014. 

Slack outsourcing case: Lesson learnt

Slack’s case is a vivid example of how a startup outsources its development to win ample investments and thrive with thousands of users. 

WhatsApp: Find the Expertise You Lack

Whatsapp is an app that hardly needs a presentation. Hands down, this is probably the most popular messaging app, with over 2 billion users around the globe. However, the wind has not always blown to WhatsApp founders’ backs. 

Back in 2012, at the outset of WhatsApp’s story, it was a small organization with only 30 full-time employees and five part-timers. The company started only with $250,000 capital raised at the seed round. 

Frankly saying, this is little to kickstart a product. But WhatsApp needed to keep its costs down and find the web development talents with the quality/price balance.  This is why the company turned to East Europe, the biggest outsourcing hub, to find tech talents for developments. 

WhatsApp outsourcing case: Lesson learnt

Outsourcing does not only help to reduce costs, but also opens access to an enormous talent pool. Isn’t this what matters when starting a product? 

CitiGroup: Outsourcing Helps to Save Up

Among the famous outsourcing examples, Citigroup, a US-based  multinational investment corporation probably sits atop as the oldest company to hire overseas. Citi has been hiring people offshore since 1992, outsourcing workforce from India, the Philippines, and Poland. The company’s efforts in this direction went even further. In 2014 Citi slashed  11,000 jobs at its HQ, at least a quarter of which were IT specialists, to bring them offshore. This move saved the company $1.1bn a year. 

Outsourcing tech development is a widespread example among banking giants. For example, such banking entities as Bank of America, Barclays, Goldman Sachs, and J.P. Morgan also hire developers overseas.  

CityGroup outsourcing case: Lesson learnt

Outsourcing can be a viable option not only for startups, but also big corporations and banks. 

Basecamp: Outsource Web Development and Focus on Business

Basecamp, a company offering project management solutions, is another example of a successful outsourcing case. At some point in growth, the company faced the “cobbler’s children” problem. While others were using their tool to manage projects and work, they had internal issues managing workflow and client support. As a result, Basecamp decided to outsource some essential development functions to resolve this situation so that their internal teams could focus on business. 

Basecamp outsourcing case: Lesson learnt:

The tip for picking up from Basecamp is identifying your weak spots in the company and outsourcing development work to remote programmers to drive internal improvements for the organization. 

Google: Outsource to Cut Labor Expenses

It turns out even the 89,000+ in-house Google army cannot handle the massive workloads. This is why Google outsources global talents and partners with contractors for its AdWords project, which completes the company’s lion’s share in revenue (2017). According to Bloomberg, 2018 was the first year when the number of Google’s contractors surpassed direct employees .

Google purports the first reason to outsource is the access to the global pool of talents and expertise that lacks within Google's walls. 

Secondly, by outsourcing, the company skips employment and operation costs. 

Google outsourcing case: Lesson learnt

When it comes to outsourcing – take it rationally. If you cannot find the right talents in your current personal – no need to seek them in the labor market. It takes a little time to find the expert you need with no additional expenses required. 

Alibaba: Outsource the Talents You Need

Alibaba, the Asian e-commerce giant, is another example of successful outsourcing. As of now, the company wields 779 million active customers and has 149,2 billion in revenue. In fact, the company has outsourced its website design and development work. 

Back in the 90s Jack Ma, Alibaba’s founder faced a scarcity of resources. There were Chinese specialists with expertise in e-commerce development. Another complication was that China had formidable internet restrictions, which was a hindrance for website development. 

So the company started to seek partners and outsourced overseas across a range of different projects, and they found the human resources they needed in the US. By hiring specialists overseas, the website started growing at an astronomical pace. For instance, in 2014 Alibaba hit the record by becoming the largest IPO in history and raising $25B. 

Alibaba outsourcing case: Lesson learnt

You should clearly see your weaknesses. By knowing the talent gaps in the region, Alibaba managed to outsource resources elsewhere and grow into a flourishing business. 

Recap: Why Companies Outsource?

As it stems from the IT outsourcing examples, hiring developers remotely helps tackle many business problems. Let’s summarise some of them. Here are the key objectives that companies pursue when outsourcing developers from abroad: 

Cost reduction

‍ working with remote contractors allows to save up on operating costs. The economic interests play a more critical role, especially in the midst of COVID-19 outbreak, when the economic environment is unstable;

Focusing on business

Ooutsourcing web/app development functions, companies manage to double down on the product development, scaling-up and enhancing the speed to market; 

Saving funds at the beginning

‍ Young startups tend to outsource web/app development at the beginning of their journey to save funds and invest them into the product;

Gain new expertise

If you want to test a new AI-based technology for your product or some AR feature for an app, employing a person might be too overwhelming. Outsourcing a subject specialist with the needed skills might be a less effort-consuming solution; 

Avoid extra labor costs

Again, you do not have to go through all the employment fuss and provide all the social benefits, when you can outsource product development to a contractor and save your budget.  

Conclusion 

The IT outsourcing cases I described show that outsourcing is a viable solution that can save your business, regardless of its size, business model or age. If you want to know more, contact our team , so you could figure out what is the optimal solution for your business.