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Business Process Outsourcing - BPO

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Last updated date: 24th Jul 2024
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Business Process Outsourcing Meaning

I work for a BPO firm. Wait. Did you understand it? I work for a call center. Undoubtedly, the terms BPO and call center are most often used interchangeably. However, there is a difference between the two. The key difference is that a BPO Company accomplishes various back-office jobs of any corporate business like customer support, bookkeeping, and accounting operations. However, a Call Centre Company handles just telephone calls to take orders or to provide customer service. Nowadays, BPO is gaining demand. Roll up your sleeves to get into the bottom of business process outsourcing, famously known as BPO.

What is Business Process Outsourcing?

Business process outsourcing is contracting a portion of any company’s non-core functions and activities to a third party under commerce jargon. While non-primary business is outsourced to a vendor, it does not lose focus on its core operations. In simple terms, it is executing corporate endeavours outside the organization. This approach is widely observed across the industry sector. Payroll, human resources (HR), accounting, customer relations are few lateral functions that constitute BPO services. The key features of BPO are flexibility, cost-effectiveness, speed, and availability of the BPO workforce.

Accenture, IBM, Infosys, Mphasis are among the top BPO companies providing their services to innumerable global organizations. With this information, let us further study the advantages and disadvantages of BPO.

Advantages of BPO

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Benefits of BPO

Cost Reduction

BPO has a talent pool of workforce employed at very low wages. Henceforth, outsourcing aids the organization in achieving the non-critical business operations at low investment. Thus, cost reduction is a critical reason for an organization choosing outsourcing options to execute its various business processes.

Availability of Skilled Experts

BPO employees are the skilled experts. Instead of recruiting and training the employee for a particular work. Most organizations make a contract with a BPO as BPO has the availability of experienced professionals. Thus, the organization focuses majorly on their primary work instead of involving into recruitment and training activities full of hassles.

Enable to focus on Core Business

Since a significant chunk of non-critical jobs like payroll, accounting, research, surveys are outsourced to the third party or vendor, it enables the senior management of the company to focus on its primary operation. It also assists in improving employee productivity to make fruitful decisions, which generates revenue for the company.

Source of Client Feedback and Reviews

First-hand feedback is very crucial for any flourishing business. Most BPO’s are in communication with the customers directly. It helps collect the reviews and feedback, which allows the company to work and improve its services and products.

Access to recent Technologies

For any small and middle-sized company, buying licensed software could be a risky proposition. Not just this, it is challenging to keep up with the latest technologies and developments. On the other hand, the BPO companies are up to date with all the technologies to serve their customers. Along with access to the latest technology stack, BPO has skilled employees who have the relevant knowledge, which proves to be a complementary benefit to any global organization.

Excellent Employment Prospects

The evolution of BPO helped in creating a vast number of job opportunities. BPO is ranked at second position for creating jobs in Asian countries. Not just the job opportunities, employees are paid a handsome amount for their work. It is the reason why most of the youngsters today are attracted to the BPO. BPO has alone helped to improve the GDP of the small countries.

With the above-confirmed paybacks, BPO has its flipside as well. Below are the few demerits of BPO.

Disadvantages of BPO

  • There can be gaps of communication between customer and vendor companies. The two companies in the contract may adhere to different ethics and standards of services, leading to friction between two companies.

  • BPO often leads to logistic issues, since both the companies work in different time zones. It could raise problems in attending the online meeting, interactions, etc. It is quite obvious that the vendor company employee has to adjust to its client's working hours.

  • Communication and time zone differences might give the impression of an inferior quality of service. Henceforth it is essential to keep continuous communication and transparency with BPO assignments.

Fun Facts

  • Do you know the business process outsourcing (BPO) industry has emerged at a fantastic rate? By 2023, it may be worth an estimated $52 billion worldwide.

  • Do you know Information Technology Enabled service, commonly called ITES, is a form of BPO, utilizing technology's strength to serve its various functions in finance, HR, administration, health care, telecommunication, manufacturing, etc.?

FAQs on Business Process Outsourcing - BPO

Q1. Classify and explain BPO Services

A1. BPO can be classified into Back office Outsourcing and Front Office Outsourcing. The former comprises various activities like data management and entry, payment, accounting, and quality assurance. All these tasks are necessary for any core business to run smoothly. Simultaneously, the latter covers the email, fax, and telephonic conversations and communication with clients and consumers. Companies contract services like customer support, market research analysis, technical support, inbound and outbound sales.

Q2. Define Onshore, Offshore, and Nearshore Outsourcing.

A2. Onshore Outsourcing is services achieved from outside the company, but both vendors are also present in the same country. ITES is a classic example to understand Offshore Outsourcing. It is achieved by exporting the technology-related task mostly to the United States to the various politically stable and low employee costs countries. Lastly, Nearshore Outsourcing is a task done by the contractors available in neighbouring nations rather than in the same country.