Business process outsourcing (BPO) is an operational strategy that allocates day-to-day tasks and procedures to outside firms or third-party service providers. By outsourcing traditional business tasks, companies have more time and resources to dedicate to core competencies.
The BPO strategy has taken off in recent years as businesses seek experienced partners who can provide best-in-class skills and cost-effective ways to manage processes, including customer service, technical support, IT services, human resources, accounting, and even sales, marketing, and revenue generation.
Front-Office versus Back-Office BPO
BPO services are usually broken down into two basic categories, front-office and back-office outsourcing. Front-office BPO refers to operations that are customer-facing such as customer service, sales, and account management. Back-office BPO refers to internal business operations such as human resources, accounting and IT services. Working with a BPO partner who has a variety of strengths and services in both areas reduces the number of vendors to manage, improves integration between front- and back-office processes, and enhances the overall governance of business relationships that expand over time.
Outsourcing is Not Always Offshoring
Customer service BPO has become a major growth industry in emerging economies like China, India, South Africa, and the Philippines, but outsourcing doesn't necessarily equal offshoring. Many companies use BPO partners to rapidly deploy customer contact centers or virtual at-home workforces in the U.S. or in their home country.
New Technologies Create More Efficiency
Cloud technologies and Software as a Service (SaaS) capabilities enable BPO companies and their customers to break the barriers of on-premise technology. SaaS solutions offer rapid deployment and reduce the capital costs of acquiring leading-edge technology for customer experience delivery. SaaS solutions also enable the deployment of at-home agents or work-at-home associates. By utilizing a virtual workforce, companies recognize faster implementation times, lower operational costs, and flexible staffing solutions that can scale up or down as needs change.
Benefits of BPO
At the basic level, BPO streamlines operations and promotes overall flexibility, but it often delivers much more. By outsourcing certain functions, business leaders and departments can focus on the aspects that differentiate their offering in the marketplace. As companies (and particularly start-up companies) grow, regulatory and service demands can bog down entrepreneurial vigor. BPO allows executives to maintain the startup spirit and specialize in the areas that make their product or service unique.
Best of all, BPO services can deliver quantifiable business benefits that increase efficiency, enhance customer experience, and boost sales revenue. BPO companies specialize in their business processes and are driven by results. As such, success metrics are often defined in the BPO contract, and companies that outsource recognize measurable improvements in performance and create a competitive advantage.