Business process outsourcing: Competitive advantages through the outsourcing of document extraction
What is Business Process Outsourcing?
Business Process Outsourcing (BPO) has its origins in the manufacturing industry, where soft drink manufacturers have outsourced some stages of the supply chain to other companies. Although these stages were not the core business, as they did not directly affect the final product, BPO nevertheless played an important role in other operations that helped maximize the profits of these companies over the years.
Today, many sectors and companies are adopting the practice of BPO, with two main categories of BPO: back office BPO and front office BPO.
Back office BPO refers to an arrangement whereby a company outsources tasks such as IT solutions, accounting, data processing, payroll processing, invoicing and quality assurance to other companies. On the other hand, front office BPO refers to services that are more visible to customers, such as social media marketing, call center operations, technical support or sales.
Over the years, many organizations have begun to outsource such business processes instead of handling them internally. Financial services, retail, marketing and sales, information technology, entertainment, consulting services and hospitality, to name a few. In all these industries, certain processes are carried out that are not the core business of their business models, but are nevertheless necessary for the smooth running and delivery of the value proposition. In addition, there may be other processes that are only required for a temporary period of time, but again are absolutely necessary. Instead of opening internal departments, allocating resources to them and training and hiring employees, it often makes more sense to hire an external company or agency that specializes in performing these tasks.
How does OCR fit into the BPO framework?
One of the most important advances in recent decades has been the collection and use of huge amounts of data. With the help of improved computing power, it is possible to generate and process more and more data. The processing of the data in turn leads to new data that must be processed and stored.
While a substantial part of this data is stored in digital form, a lot of data is also available in written and printed form. Examples are delivery notes, invoices, receipts, notes, correspondence, account statements, contracts, certificates and many more. However, since this data is also processed further and digital document management systems (DMS) are standard in many companies today, this data must first be properly digitalized before they can be processed downstream. To capture the text on such documents, the concept of Optical Character Recognition (OCR) was developed. In simple terms, OCR is a technique that processes a document in a specific way to capture the text it contains. For example, the date, address, references and important amounts can be recognized and read out. This technique is not only accurate but also fast, reducing the time required compared to manual data entry.
What began as an experiment to solve a seemingly impossible task has now become a necessity. Document extraction using OCR has led companies to adapt to the new possibilities. Among other things driven mainly by – yes, exactly – increasing cost pressure. Financial service providers use OCR software to extract data from contracts, official certificates, tax returns, etc. of customers. Retail and some other industries use the technology to identify line items on invoices, for example, and to make order reconciliations and automatic postings in their accounting processes. Many companies also offer customers a camera SDK for scanning documents, barcodes and promotional codes, which they can then redeem for promotions. Industries such as healthcare, which rely heavily on paperwork, have adopted text extraction methods to automatically capture documents such as insurance forms, doctors’ notes, and patient information. Parking lot authorities use them to identify vehicles by scanning license plates.
It is not difficult to see that the use of OCR and DMS systems has found its way into many business areas. When it comes to implementing and managing these systems, companies can either opt to outsource these tasks or develop their own solutions internally. While internal solutions and capabilities can certainly be built up, BPO has some significant advantages that should first be emphatically weighed against those of building it in-house.
Advantages of outsourcing document processing
Before we look at the benefits of outsourcing document processing, it must be said that modern OCR software is an increasingly complex technology. This has to do with the fact that the application of methods such as machine learning and deep learning with advanced architectures embody much more complexity than traditional technologies in order to recognize letters, numbers and other characters and to classify them semantically correctly. In addition, each type of document is different, i.e. a different collection of information and regularities, which can vary greatly from country to country. Even the most modern technologies often have difficulties with the correct execution of their job without corresponding examples. The supervision and post-processing of operators are therefore not only useful to guarantee quality assurance but also necessary to extract the correct data from a document in edge cases. However, a sustainable benefit of this approach compared to traditional approaches is that it is precisely this human-robot collaboration that can teach the machine new skills, which means that it requires less and less human intervention. In economic terms: there is a potential for substantial cost reduction over time.
Due to the high complexity of document extraction systems, the development, adaptation and extension of a robust system is often time-consuming and requires dedicated expertise. Something that conventional BPO usually do not have. But with Parashift, we offer just that – a team of physicists, mathematicians, developers and specifically trained operators, as well as state-of-the-art OCR software that can keep up with the old industry standard after only one year on the market and is already ahead in some specific areas. And again… Parashift’s software learns every day on the basis of all processed and annotated documents, which always benefits all customers. With this approach we hope to be able to successfully tackle the last mile of the extraction problem and not have to stop at 95% extraction accuracy on, for example, AP invoices in a customer project because the investment requirement is growing exponentially. Rather, we share development costs and learning effects with all our customers and go down a path that was previously unattainable and reveals an x-fold ROI.
So Parashift not only gives your company access to top-notch OCR software with comparatively non-existent entry barriers, because with Parashift you can also start purely transaction-based, but you can also directly outsource the entire post-processing of OCR extraction results. By outsourcing these tasks, which includes the sustainable improvement of your OCR software, you can fully concentrate on your core business again. Instead of allocating significant internal resources, you can use them for purposes where the value generation is much higher and aligned with your business strategies. In other words, you have more capacity and resources to build competitive advantages.
Therefore you clearly benefit from the classic advantages of BPO: gains in effectiveness and efficiency, flexibility and sustainable process improvements. However, since this model is combined with that of a dedicated technology provider that focuses on a very specific problem, in our case the classification and data extraction of documents, the impact of these effects is significantly higher over time. This is because the work component of BPO, i.e. the post-processing of the extraction, serves Parashift as a training basis for improving its extraction technologies and can be immediately applied, making it possible to offer you higher data quality for cheaper money. Therefore, more and more companies from all over the world will want to process documents with Parashift. The logical consequence is a powerful technology that will eventually be able to autonomously process the majority of the daily incoming mail of any company. And all of this for a marginal monetary amount.
Would you like to know more about how we can support you in handling your documents or how the Parashift platform can be integrated into your business processes? We recommend that you arrange a free online demo with one of our product specialists. Alternatively, you can send us an e-mail with your questions or simply call us directly on +41 61 508 77 77. We look forward to getting to know you!