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What is business process outsourcing (BPO)?

Business process outsourcing (BPO) is a business practice in which an organization contracts with an external service provider to perform an essential business task.

Typically, an organization first identifies a process that is necessary for its operations yet is not part of its core value proposition in the market; this step requires a good understanding of the processes within the organization and strong business process management.

Processes that are performed the same or similarly from company to company, such as payroll or accounting, are candidates for BPO.

Because these commodity processes don't generally differentiate one organization from another, enterprise executives often determine there's little value in having their own staff perform them. Indeed, companies calculate that outsourcing these processes to a company specializing in these processes could deliver better results.

What is BPO used for?

Organizations engage in business process outsourcing for two main areas of work: back-office functions and front-office functions.

Back-office functions, sometimes called internal business functions, include accounting, information technology (IT) services, human resources (HR), quality assurance, and payment processing.

Front-office functions include customer relations services, marketing, and sales.

BPO contracts can involve outsourcing an entire functional area, such as the HR department, to a single vendor. Organizations also often outsource specific processes within a functional area. For example, an organization may outsource its payroll process but perform all other HR processes itself.

Commonly outsourced processes include the following:

• accounting
• administration
• customer services and call centers
• HR
• IT management and services
• manufacturing
• marketing
• research
• sales
• shipping and logistics

1. Lowered Costs:

The greatest benefit that organizations are experiencing while using BPO services is cost savings. Typically, in businesses, a large portion of their finances is incurred into manpower. However, it is not possible to perform all businesses within the company. Because it includes the process of hiring, and onboarding which is time-consuming as well as expensive.

2. Enhanced Speed and Efficiency:

It is a proven fact that organizations tend to stay in their wheel tracks for a longer time when they are outsourcing their non-critical business processes to the outsourcing partner. In this case, they can successfully manage their business criticalities more efficiently while paying almost negligible attention to the less complicated functions.

3. Gaining Competitive Advantage:

To be more competitive in the overseas market, it is of utmost importance for agencies to find and continuously improve their expertise and skills on services and products that they are offering. With non-critical processes handled by outsourcing partners, organizations find more room to become more efficient on their products thus tapping more customers in their respective target market.

4. Greater Flexibility:

Efficient allocation of resources is the key to success for any business. When a company outsources its nosiness functions to outsource vendors, it is like that the vendor will spend time and expertise while delivering the project on time. Hence, they can allocate their resources to the core business activities and employees for better performance.

5. Time Zone Advantage:

With scaling businesses, often companies enter into a foreign market. The most common problem that firms face that has businesses spread across the globe is time zone. If the company is headquartered in Sunnyvale, then it will be difficult to expand their businesses in different countries of Asia and Australia, when you can’t have employees available for each time zones of those countries. Instead of opening offices in various countries, it is more efficient and cheaper to hire a BPO service provider located in those areas.

6. Increased Security:

Outsourcing firms that are specialized in handling financial services and processes provide better security and safety from cyber theft and cybercrime. For a small-medium-sized business, it is difficult to hire a safety and security team for monitoring security measures against cyber theft.

7. Global Expansion:

If a company thinks to enter a foreign country, then for some activities it requires national law expertise, local market knowledge, knowledge of the target audience, and communication with them. In this scenario, hiring a BPO company helps in the quicker expansion and boosting efficiency. For example- If a US-based company is entering the French market, then hiring a local partner company with native manpower helps in greater business expansion.

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+91 949 583 3319

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info@transorze.com (MD)
mentor@transorze.com (Director Training)
jyotsna@transorze.com (National Head)

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Minus 2, Thejaswini Building,
Technopark, Trivandrum, Kerala.