Business process outsourcing (BPO) is the contracting of a specific business task, such as payroll, human resources (HR) or accounting, to a third-party service provider. Usually, BPO is implemented as a cost-saving measure for tasks that a company requires but does not depend upon to maintain their position in the marketplace.
Two categories BPO is often divided into are back office outsourcing, which includes internal business functions such as billing or purchasing, and front office outsourcing, which includes customer-related services such as marketing or tech support.
Back office outsourcing offers organizations services to help manage tasks like data entry, data management, surveys, payment processing, quality assurance and accounting support. Back office tasks are integral to a company's core business process and help keep business running smoothly.
Front office outsourcing services deal with customer interactions. Examples of front office tasks include phone conversations, email, fax and other forms of communication with customers. Front office outsourcing providers' service lists include:
- Customer service/support
- Technical support/help desk
- Appointment scheduling
- Inbound/outbound sales
- Market research
BPO that is contracted outside a company's own country is sometimes called offshore outsourcing. BPO that is contracted to a company's neighbouring country is sometimes called nearshore outsourcing, and BPO that is contracted with the company's own county is sometimes called onshore outsourcing.
Pros and cons of BPO
The top advantages of BPO are saved money and increased time to focus on the core business. Some other benefits include:
- Speed and efficiencies of outsourced business processes are enhanced
- Organizations using BPO get access to the latest technology
- Freedom and flexibility to choose the most relevant services for the company's operations
- Quick and accurate reporting
Some disadvantages of outsourcing business processes include:
- Data privacy breaches
- Overdependence on service providers
- Communication issues that delay project completion
- Inflexible Service Level Agreements making change difficult.
Optimal BPO Solution
Many company’s are now moving to “off-shoring” rather than BPO which achieves virtually all the benefits without the drawbacks as all the employees our effectively yours.