As operators strive to streamline costs and operations, business process outsourcing (BPO) proves effective in meeting these demands. BPO is when one company hires another company to perform some of its essential work processes.
BPO processes typically fall into two major areas — back office and front office processes. Back office processes are the company’s internal operating processes, such as HR, IT and accounting. Front office processes pertain to any situation where the company interacts directly with the customer. Examples include customer support, telemarketing and marketing.
When faced with economic challenges, many companies scrutinize internal processes and operations to identify any opportunities for cost control or increased operational efficiency. Changes to staffing needs are a side effect of a market downturn.
Operators of all sizes outsource both back- and front-office functions. BPO can be especially beneficial to smaller oil and gas operators or private equity-backed operators, like Camino Natural Resources LLC (read case study), that need to run lean operations or do not have the resources to build the staff needed to perform processes in-house. Larger operators might decide to outsource a process that was traditionally done in-house after realizing the service provider can perform the job more efficiently at a lower cost. A recent article by Ernst and Young highlights how the benefits of outsourcing are even more magnified during market downturns when companies offload non-core functions to focus on strategy and survival.
Below are five benefits operators can expect from outsourcing business processes:
1. Cost savingsMany oil and gas companies choose to outsource certain processes because the service provider can perform the work more cost effectively than the operator can in-house. For example, Enverus estimates it costs an operator an average of $3-$5 per JIB mailing in-house, compared to $1.87 with Enverus Print & Mail services. For smaller-sized companies, outsourcing revenue check mailing eliminates the need to purchase and maintain expensive printing equipment along with other overhead expenses. Southwestern Energy reduced its internal support costs by half with Enverus Call Center Services.
2. Increased efficiency and staff productivityOutsourcing non-core processes, like answering landowner inquiries or processing massive amounts of revenue detail, allow organizations to use their highly-skilled knowledge employees like accountants, division order analysts and land teams to focus on core areas of the business. While monthly check runs are essential to upstream operations, accountants were hired to perform financial reporting and analysis, not stuff and mail envelopes each month. Utah Gas Company’s accounting team gained the equivalent of 24 working days back per year for each of its three team members by outsourcing their print and mail to Enverus. Another operator, Montage Resources Inc., increased its internal efficiency post-merger by outsourcing its print and mail and owner support to Enverus Call Center services.
3. ScalabilityBusiness processes might have seasonal fluctuations. For example, accounting teams must prepare for tax season each year. Depending on the provider, BPO can provide an easy way to scale owner support up or down, avoiding the need to hire additional in-house staff with the right knowledge. Merger and acquisitions are also common in oil and gas. When an operator’s owner count grows literally overnight, the ability to scale support to meet the needs of additional owners is essential.
4. Access to specific expertise and resourcesIf you choose the right provider, BPO eliminates the need for hiring certain skill sets in-house and provides access to industry experts. With the many nuances specific to oil and gas accounting processes, oil and gas companies would experience more benefits by choosing a service provider that has expertise in the industry. For example, Enverus Owner Relations Services are designed for oil and gas. Our team has years of experience handling revenue data, printing monthly revenue checks and statements, and providing dedicated call support for operators. Also, because we are focused on oil and gas, we can provide additional benefits that other types of providers can’t match. Enverus Print & Mail services are SOC 2, Type II compliant and work with an operator’s bank to administer MICR testing.
5. Maintain business continuityOutsourcing certain processes can ensure those tasks continue, regardless of the circumstances at your office or situations that might occur with team members. For example, Enverus mail house processes are automated, ensuring your files are routed for printing without the need for direct intervention. Enverus also maintains active relationships with multiple print vendors, in multiple geographies, so there are ready alternatives should any of our primary print vendors go offline. One operator said outsourcing their print and mail made it easier to switch to a virtual working environment when the pandemic arrived.
ConclusionWhile BPO provides many compelling benefits for oil and gas operators, it is not a decision to be made lightly. After your company does the work of deciding if it makes sense to outsource, you must choose which service provider to hire. You should analyze vendors based on how it would affect your internal staff, processes and workflows. Some vendors may require more implementation time than others. You should also check for any hidden costs or fees with these services. Enverus Owner Relations Services are designed for oil and gas. Our team has years of experience handling revenue data, printing monthly revenue checks and statements, and providing dedicated call support for operators.