BPO

Business Process Outsourcing

What is BPO?

Business Process Outsourcing, or BPO, refers to the process of contracting standard business functions to be handled by a party outside of the company. Functions most commonly outsourced include: Customer service, Accounting, Payroll, Human resources management, IT services. Companies can often benefit from implementing the practice of BPO, meaning more flexibility and cost efficiency can be achieved. Third-party providers set up for a dedicated task such as payroll perform more efficiently and are able to transfer those cost savings to their clients.

Many businesses, from small startups to large companies, opt to outsource processes, as new and innovative services are increasingly available in today's ever-changing, highly competitive business climate. Broadly speaking, companies adopt BPO practices in the two main areas of back office and front office operations. Back office BPO refers to a company contracting its core business support operations such as accounting, payment processing, IT services, human resources, regulatory compliance, and quality assurance to outside professionals who ensure the business runs smoothly. By contrast, front office BPO tasks commonly include customer-related services such as tech support, sales, and marketing.

The best way to find yourself is to lose yourself in the service of others.
– Mahatma Gandhi

BPO Types

The breadth of a business' BPO options depends on whether it contracts its operations within or outside the borders of its home country. BPO is deemed "offshore outsourcing" if the contract is sent to another country where there is political stability, lower labor costs, and/or tax savings. A U.S. company using an offshore BPO vendor in Singapore is one such example of offshore outsourcing.

BPO is referred to as "nearshore outsourcing" if the job is contracted to a neighboring country. Such would be the case if a U.S. company partnered with a BPO vendor located in Canada.

A third option, known as "onshore outsourcing" or "domestic sourcing," occurs when BPO is contracted within the company’s own country, even if its vendor partners are located in different cities or states.

BPO is often referred to as information technology-enabled services (ITES) because it relies on technology/infrastructure that enables external companies to efficiently perform their roles.