What is Business Process Outsourcing BPO?
Business Process Outsourcing (BPO) is the delegation of business processes to an external service provider to a nearby or farther location. BPO uses various technology-enabled services to optimize the delivery of services.
Some of the usual outsourced business functions are the following.
- Human resources
- Customer service
In the case of content providers, these could mean hiring writers, remote editors, or virtual assistants.
BPO speeds up processes and enhances efficiency. Companies that outsource some of their business processes use their time on core services and competencies.
With this shift in focus, companies improve their current processes which may result in improved customer satisfaction. BPO helps companies divert their resources to more critical business strategies.
Often, companies find it impractical to hire a full-time position in-house because of the cost associated with doing so. Outsourcing services can also help them save costs and resources in hiring suitable employees.
How does Business Process Outsourcing work?
Business process outsourcing happens when a business taps a third-party service provider to operate some of its internal processes. Such ‘processes’ include customer service, accounting and finance, or sales.
It is different from hiring an agency to do specific tasks, as the outsourcing provider (BPO) is more concerned with the ongoing production of labour-intensive tasks, instead of the higher-level strategy and guidance.
Now, business process outsourcing has broadened and is more akin to staff augmentation, or staff leasing.
What are the benefits of business process outsourcing?
There are many benefits to outsourcing, as well as some downsides and risks. The common benefits include:
Companies can enjoy savings of up to 70% by leveraging the salaries and costs in countries such as the Philippines and India.
Businesses get to access a bigger pool of talent that can fit their requirements. They can have better options in hiring employees since they are not limited to what is available in their home countries.
At the same time, business process outsourcing opens clients to global trade opportunities. They can establish their global presence and expand more easily to other locations since they already have operations in the area.
BPO reduces internal local compliance obligations including providing additional office spaces to employees. Instead, organizations can hold their business operations on a remote setup, most usually having their teams in an office provided by the BPO firm.
Companies cannot always do everything on their own. BPO enables them to leverage the skills of other specialist companies on more complex tasks such as accounting and IT.
Lastly, BPO enables organizations to focus on their core business functions. This is since most of their non-core business operations are done with the help of a reliable service provider.
Business process outsourcing examples
The business process outsourcing sector is a vast industry, generating over $200bn annually, and employing millions of people worldwide.
BPO can be seen in different forms and contexts, from hiring single staff to getting an offshore team. Some examples of BPO include:
Facebook and Uber outsource many of their operational functions, including content moderation for Facebook, and customer service for Uber
A medium business with 50-500 staff might outsource the labour-intensive accounting and finance functions to a team in the Philippines.
Small business and entrepreneur
It is common for small business owners to have a Virtual Assistant (VA) working for them full time and remotely from the Philippines.
What are the different types of BPO?
The type of business process outsourcing can be characterised by their specialisation, location, and size.
Generalist or specialist BPOs
Business process outsourcing is in the human resources and professional services sector. However, their services extend across all industries. The majority of BPOs are generalists, in that they offer a full range of professional services.
Meanwhile, some specialise in certain verticals such as the following.
Legal process outsourcing
Legal process outsourcing deals more with delegating legal processes and compliances to legal firms in another area.
Knowledge process outsourcing
Meanwhile, knowledge process outsourcing enables companies to outsource knowledge-related work including research and development, innovation, and creatives.
Business process outsourcing typically operates from developing nations such as the Philippines, India, and Colombia. They typically have cheaper cost-of-living and bigger populations. Different locations offer different advantages.
Size of BPO
The bigger BPOs employ more than 250,000 people. They are huge, global operations. Medium-sized BPOs range from 500-5,000 staff and offer a full range of services. The smaller BPOs might have 1-500 people.
Functions of business process outsourcing
Collectively, business process outsourcing provides any kind of staffing solution. Common functions of BPO include:
Finance and accounting
Outsourced finance and accounting services help businesses manage their books, monitor cash flow, and keep up with corporate income tax compliances without fuss.
Healthcare outsourcing, meanwhile, organizes various back- and front-end functions done for the healthcare and insurance industries.
Creative and content
Creative services outsourcing covers everything from post-production of Hollywood movies to newspaper and website content.
Tech, IT and development
IT outsourcing involves delegating network management, web and app development, and cybersecurity protection to IT firms in different countries.
Sales & customer support
Some BPO providers specialize in sales and customer support for pre- and post-sales transactions. This helps companies meet the expectations and demands of their customers, keeping them satisfied even after their purchase.
BPOs and marketing firms can help in ongoing marketing, communication and branding activities for their clients. This helps them attract more suitable leads in a cost-efficient way.
Talent and HR
Businesses can delegate HR, recruitment and compliance to professional employer organizations to maximize recruitment and workforce management.
Generalist BPOs help organizations accomplish general business administration and operational activities. This includes data entry, appointment setting, and other related functions.
Supply chain management
Lastly, e-commerce stores benefit from outsourcing supply chain management to manage warehouse and delivery processes.
Top BPO companies in the world’s top outsourcing hubs
A wide range of business process outsourcing companies in different parts of the world provide utmost services to their Western and local clients. Many of them even earned recognition by award-giving bodies due to their performance in both their roles and their level of care for the employees.
Check out the top BPO companies in several outsourcing destinations below.
Business Process Outsourcing (BPO) services
With the rise of new offshore outsourcing locations, companies can have better options in terms of location and services they can delegate. However, finding a suitable BPO company can be a daunting task to be done on their own.
Good thing advisory services such as Outsource Accelerator is there to help them.
Outsource Accelerator is the most trusted source for independent information & advisory for Business Process Outsourcing (BPO). We have over 5,000 articles, 350+ podcast episodes, and a comprehensive directory with 2,500+ BPOs from different locations.
Outsource Accelerator’s offerings make it easier for clients to learn about, and engage with, business process outsourcing companies worldwide.