What is Business Process Outsourcing (BPO)? What is Business Process Outsourcing BPO?
Business Process Outsourcing (BPO) is the engagement of services from a third-party provider. BPO uses various technology-enabled services to hasten the delivery of services. The business activities could be back-office such as, but not limited to, payroll, accounting, human resources, or front office jobs like customer service, sales, and marketing, etc. In the case of content providers, these business activities could mean hiring writers, remote editors, or virtual assistants.
BPO speeds up processes and enhances efficiency. Companies that outsource some of their business activities use their time on core services and competencies. With this shift in focus, companies improve their current processes that 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. How does Business Process Outsourcing work?
When a business engages an external specialist to manage and operate some of its internal processes, it's referred to as business process outsourcing. 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: Cost savings: significant savings of up to 70%, leveraging the lower global salaries Global market: access to a bigger employment pool of talent Global presence: having operational across the globe increases trade opportunities Flexible workforce: reduces internal local labour and employment compliance obligations Leverage skill: leveraging the skills of other specialist companies Focus: enables the client company to focus on their core functions
Business process outsourcing examples
The business process outsourcing sector is a vast industry, generating over $200bn annually, and employing many millions of people worldwide. Some examples include: Big enterprise
Facebook and Uber outsource many of their operational functions, including content moderation for Facebook, and customer service for Uber Medium-size businesses
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 hem full time, 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 generalist, in that they offer a full range of professional services, although some specialise in certain verticals (ie accounting, or animation). Location
Business process outsourcing typically operates form 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: operational, technical and specialist functions Healthcare: various functions of the backend of the healthcare and health-insurance industries Creative and content: everything from post-production of Hollywood movies to newspaper and website content Tech, IT and development: network management, web and app development and maintenance Sales & customer support: ongoing sales and customer operational support and delivery Marketing: ongoing marketing, communication and branding activities Talent and HR: externalising the management of company HR, recruitment and compliance Administration: general business administration and operational activities Business Process Outsourcing (BPO) services
Outsource Accelerator is the most trusted source for independent information & advisory for Business Process Outsourcing (BPO). We have over 4,000 articles, 200+ podcast episodes, and a comprehensive directory with 700+ BPOs… all designed to make it easier for clients to learn about, and engage with, business process outsourcing.
What is Global Outsourcing? What is Global Outsourcing?
Global outsourcing refers to the process of contracting a third-party service provider overseas to delegate a certain business process. Companies in the West either outsource a task, project, or even an entire department to countries such as the Philippines and India.
However, unlike traditional business process outsourcing, global outsourcing involves tapping multiple countries at once for specific forms of service. For instance, a single client may either outsource IT services to India, customer service to the Philippines, web development to Brazil, and so on.
This certain method brings certain benefits to clients, such as better risk mitigation, flexibility in operations, and better innovation. Global outsourcing strategy
Global outsourcing service providers use the global delivery model (GDM) to break down several assets and functions of a business. Then, they divide it into several locations and geographies. As a result, a certain provider may manage several functions from different locations.
This helps in maximizing the strengths used in the business process, such as customer service. Each team can also focus on a certain aspect assigned to them. For instance, the team assigned to do live chats don't have to pick up calls, since it is delegated to another team. Global outsourcing examples
Global outsourcing has been prevalent in small and large companies for years. Most of them distributed non-core activities to keep up with their demand and to expand their market. Some good examples of companies doing global outsourcing include: Google. For years now, the company has been outsourcing virtual assistant work, IT, web development, and other tasks to several offshore countries, including India and the Philippines. Amazon. Amazon's customer service and inventory management are also outsourced in several countries to optimize shipping and support around the globe. Alibaba. Started with outsourcing development to the United States, the company has outsourced several services to other countries as well to optimize their website.
What is Shared Services? What is shared services
Shared services refer to the delegation of specific tasks to a part of the organization or company. This team might house inside the main office, near it, or offshore. For instance, a company based in California may set up an IT department in another location such as New York to handle the entire IT for their teams.
Shared services is another way to save on costs by taking advantage of the cheap costs and resources offshore. It is also a strategic way to expand their operations and attract a different market aside from the local ones. Shared services and outsourcing
Shared services and business process outsourcing share a few similarities. For one, they delegate a general task to a team. Second, both of it can be onshore, nearshore, or offshore. Third, they help the business save on costs while increasing their profitability. The only difference is that outsourcing involves a third-party company. After a certain lock-in period, companies can decide whether to absorb their offshore team or keep it co-managed.
What is Queue Management? What is Queue Management?
Queue management is the approach and set of principles and tools used for a more manageable and optimized queueing system. Queue management aims to control customer flow, streamline the queueing experience, and reduce customer waiting times.
There are four types of queues: structured, unstructured, kiosk, and virtual queues. Companies, especially in the retail industry, have a queue management system to control queues and enhance customer experience. Benefits of a queue management system
A queue management system is not only for the benefit of the customers, it also helps store managers and head offices in a variety of ways: Improved crowd management
Enhanced working environment
Optimization of store layout
Customer behavior evaluation
Better employee performance tracking