Business Process Outsourcing – Learn the Ways of the New World

Business process outsourcing or BPO is referred to as a type of outsourcing wherein there is a third-party service provider that is employed to conduct one or more business functions in a company. This third-party service provider is responsible for carrying out all operations associated with the business function.

In other words, BPO is also referred to as externalization and subcontracting. While this term has been originally coined in the manufacturing industry, this term has now been utilized across various business processes.

So, what is BPO used for?

Those businesses who contract with BPO service providers want their service for two main reasons. These two reasons include front office operations and back-office operations. Front office operations will include various services like sales, marketing, and customer relations. On the other hand, back-office operations include payment processing, quality assurance, record keeping, and information technology services among others.  

In most cases, businesses outsource one or more business functions. For instance, instead of outsourcing a business’ entire HR functions, they will outsource one or two parts of the functions like outsourcing simply the payroll processes.

The business process outsourcing industry has evolved over the years and has expanded greatly compared to how it was when it was initially launched. Now, the BPO industry offers a wide range of functions and services to different organizations across numerous industries.

What are the Types of BPO services?

If you are a business owner and interested in tapping the BPO industry to help you carry out business functions and operations, it is important to know that there are different types of BPO services available for you. There is no one type of service that fits all types of business. Thus, you need to make sure to check which type would suit your business’ needs and goals.

BPO service providers can be categorized based on their locations.

• Onshore Outsourcing. This type of outsourced service is also referred to as domestic outsourcing. This type comes from a service provider that is located in the same country.
• Nearshore Outsourcing. This type of BPO service comes from a service provider that is based in a neighboring country.
• Offshore Outsourcing. Offshore outsourcing refers to acquiring outsourced services from service providers that are based in a different country and this is often referred to as offshoring.  

Should You Opt for Outsourced Services?

The process of deciding whether or not to hire a BPO service provider will depend on various factors. The decision-making process should be done meticulously because the changes can actually impact the workflow processes and practices, the entire business operations, and the employees.

When you consider outsourcing, you should consider several things and the decision-making process will involve the following steps:

1. The business executives decide to outsource a part of or the entire business process.
2. Pros and cons of the decision are then weighed and they determine whether it makes strategic sense to the company.
3. Once they have arrived at the decision, they identify the best service provider for the work. A work shift from in-house to the external service provider is then initiated.

Benefits of Business Process Outsourcing

BPO definitely has a lot of advantages and disadvantages to offer. The advantages of BPO include the following:

• Lower Costs. One of the major reasons why more and more businesses are outsourcing business processes is the lower costs. Instead of purchasing expensive IT equipment and hiring more employees to do different tasks, businesses can simply outsource the tasks to a BPO service provider as this will reduce or simply eliminate the overhead costs.
• Focus on Core Business Functions. When businesses outsource ancillary business activities, the business is provided more time to focus on main business activities that are of much higher importance. 
• Higher Efficiency. BPO service providers are experienced in various fields and they perform at the highest level. In addition, BPO companies are known to adopt the best practices and make use of the latest technology to ensure that they deliver natural results in greater productivity and higher efficiency.
• Global Expansion. For businesses considering entering an overseas market, some business activities that require local market knowledge, fluency in a foreign language, or national law expertise can be assigned to a BPO service provider. By doing such, it can help the company boost efficiency and for a quicker realization of expansion goals.

Like other new processes, business process outsourcing also comes with a few drawbacks. These disadvantages include:

• Security Concerns. It cannot be denied that there will be security issues when working with a BPO service provider as sensitive data may need to be shared and processed by the business process outsourcing service provider.
• Communication Problems. When working with an offshore BPO company, the language barrier may be present and this can turn out to be a hindrance to working efficiently. 

Overdependence on the BPO Company. This drawback is fairly common to those businesses that have outsourced business processes to a third-party vendor for a long period of time. A business can become accustomed to how the BPO company work and they tend to become too dependent on them. Eventually, this can lead to the business paying higher than the typical costs if demanded.