Business Process Outsourcing (BPO) Guide
As the business grows, the demand for products and software services increases, ultimately requiring more people in the workplace, increasing overall costs. It can be difficult to control costs and the overall efficiency of non-essential business functions. In other cases, some companies simply do not want to manage tasks that are not aligned with core competencies. In both cases, many companies outsource such tasks. This BPO guide will help you understand the basic concepts of business process outsourcing through BPO examples.
What is Business Process Outsourcing (BPO)?
Business process outsourcing (BPO) is a type of outsourcing in which one organization transfers one or more of its business activities to another organization. This means that the non-core responsibilities of a company are delegated to a third party. The most common type of business process outsourcing is administrative work, including accounting, IT infrastructure, human resources, and payment processing. These are collectively referred to as “back-office functions”. These are activities that your organization needs to carry out to keep the business running but has no connection to the products or services you offer.
Since outsourcing started, it has evolved rapidly. Large manufacturing organizations have sought outsourcing to cut costs on non-essential activities. In addition, outsourcing is now commonplace in almost all sectors, and new technologies and globalization have made it accessible to smaller companies. BPO can be both front office and back office activities.
The BPO industry is divided into 3 categories, each depending on location, and these are listed below together with examples of BPO:
- Offshore Outsourcing
The hiring of a third-party service provider to conduct business in a country other than the one where the services or products are developed or manufactured. For example, you can spread your customer service across different countries and provide a more natural experience for your customers.
- Near-Shore Outsourcing
The third-party service provider is located in the country closest to the company’s location. For example, if your company is located in California, the BPO provider will be located in the US or another nearby country.
- Onshore Outsourcing
The contracting company and the BPO supplier are located in the same country.
Advantages Of BPO
This Business Process Outsourcing Guide provides the advantages of BPO so that you can make the right choice for your business.
Outsourcing reduces your company’s labor costs, including staff and training costs, as well as the office space needed to accommodate local staff. BPO started as a method to reduce costs for tasks that were not critical to the operation of the business. Cost reduction is one of the company’s key objectives. It is, therefore, more cost-effective to outsource these services to a third party rather than investing a lot of money in staff and equipment.
Expanding Global Presence
Outsourcing can help you connect with customers around the world. If you want to expand your business internationally, you can hire BPO companies to carry out tasks that you are not familiar with. Similarly, international call centers make it easier to serve consumers in different time zones, and having a local presence can help larger organizations penetrate new markets.
Outsourcing some of your operations to BPO companies makes it easier to focus on core tasks. Outsourcing can help with front office BPO and direct customer service, back office BPO, and things like the mailroom that can have an indirect impact on customer service. In addition, BPO companies specialize in their field and work efficiently.