business process outsourcing (BPO)

This definition is part of our Essential Guide: IT sourcing strategy guide for enterprise CIOs
Contributor(s): Emily McLaughlin

Business process outsourcing (BPO) is the contracting of a specific business task, such as payroll, human resources (HR) or accounting, to a third-party service provider. Usually, BPO is implemented as a cost-saving measure for tasks that a company requires but does not depend upon to maintain their position in the marketplace.

BPO services

Two categories BPO is often divided into are back office outsourcing, which includes internal business functions such as billing or purchasing, and front office outsourcing, which includes customer-related services such as marketing or tech support.

Back office outsourcing offers organizations services to help manage tasks like data entry, data management, surveys, payment processing, quality assurance and accounting support. Back office tasks are integral to a company's core business process and help keep business running smoothly.

Front office outsourcing services deal with customer interactions. Examples of front office tasks include phone conversations, email, fax and other forms of communication with customers. Front office outsourcing providers' service lists include:

Outsourcing options

BPO that is contracted outside a company's own country is sometimes called offshore outsourcing. BPO that is contracted to a company's neighboring country is sometimes called nearshore outsourcing, and BPO that is contracted with the company's own county is sometimes called onshore outsourcing.

Pros and cons of BPO

The top advantages of BPO are saved money and increased time to focus on the core business. Some other benefits include:

  • Speed and efficiencies of outsourced business processes are enhanced
  • Organizations using BPO get access to the latest technology
  • Freedom and flexibility to choose the most relevant services for the company's operations
  • Quick and accurate reporting
  • Save on resources related to staffing and training

Some disadvantages of outsourcing business processes include:

This was last updated in May 2016

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I agree. Outsourcing companies not only practices its profession but it also values the core of work ethic of every employees. This is needed to have a better connection between two companies. With good connection, it may double its productivity.
Thanks for the info. Job well done.
Glad to know that Business process outsourcing is continually growing here in the Philippines and such a big help to Philippine economy.
Great article,hope you could also share some knowledge about SEO/SEM Outsourcing Marketing.I heard that by investing wisely on both SEO and SEM it could help in maximizing the ROI on its online marketing budget.
That's good. Can you give a brief view by taking any example ,that what is outsourced and what is profited in such a case and how, to get a detailed view what actually they do in it?
When outsourcing we all have two main questions: How do I find the right candidate and how do I manage the outsourcer afterwards. This article addresses both and was very helpful to me. I will leave the link.
Business process outsourcing is totally useless it did not provide scope for improvement in career. I would always suggest not to join any BPO as they will not benefit to you in any manner.
If done correctly, can both improve on efficiency and be very cost effective, freeing up valuable company resources to focus on other, more critical tasks. The key, however, as with other types of outsourcing, is to do your research beforehand, lay down clear expectations and deliverables with the vendor you select, and keep to what was agreed upon by the two parties.
What tasks does your organization use business process outsourcing (BPO) for?
If anyone of you know the answer for this, kindly reply
Why software architecture essential for BPO management system?
Thanks for sharing the details about outsourcing and BPO Services.
Hello, I want to know whether to establish a BPO requires heavy Capital and Infrastructure?
Basically, by reading the above post i came to the conclusion that it is easy to establish a Back end BPO.


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