Wikipedia describes Business Process Outsourcing (BPO) as:
A subset of outsourcing that involves the contracting of the operations and responsibilities of a specific business process to a third-party service provider.
BPO is typically categorized into back office outsourcing, which includes internal business functions such as human resources or finances and accounting, and front office outsourcing, which includes customer-related services such as contact center services.
BPO that is contracted outside a company’s country is called offshore outsourcing. BPO that is contracted to a company’s neighbouring (or nearby) country is called nearshore outsourcing.
The benefits of BPO
By outsourcing business processes, companies have the ability to quickly match staffing levels with workflow needs, which can result in decreased workforce cost.
BPO vendors operate with an economy of scale and can realize service pricing levels which Small and Medium Sized Enterprises (SMEs) can’t access.
Outsourcing non-core operations saves time by alleviating employees from complex time-consuming tasks. Employees can focus on the company’s core competencies, optimizing company resources of manpower and infrastructure.
In offshore outsourcing, the overhead expense a company would need to staff and operate a remote location is avoided.
Keeping current and compliant with payroll and employment regulations is a common area where employers can get into regulatory trouble. Both payroll and employment regulations can vary drastically with geographical location. Maintaining compliance is a full time endeavor. Outsourcing these functions transfers the risk of non-compliance to the BPO vendor.
Companies operating internationally are subject to constantly changing regulations which many times are disseminated though local channels. Adding to the challenge of compliance, many countries have two sets of regulations. One set for local employees and one set for foreigners.
Some BPO vendors incorporate consulting services into their offerings. As subject matter experts they can evaluate current processes, provide consultation to determine the desired result and propose more efficient solutions.
BPO vendors can also assist with monitoring Key Performance Indicators (KPIs) to help companies maintain and increase efficiency.
A common result of an efficient process is an increase in quality. Running an optimized process allows for closer scrutiny of what processes are working and what’s not. Company initiatives and time can be directed towards optimization vs. doing business as usual.
The BPO vendor has internal Quality Assurance processes in place to maintain quality. The non-core operation may be too small to be of concern to the client company to warrant QA standardization.
The key to any BPO service is to not focus on cost. It’s the increase in value that matters.
Learn more about outsourcing