What is Business Process Outsourcing?

What is Business Process Outsourcing?

Business Process Outsourcing (BPO) is a kind of outsourcing in which the company outsources a specific activity/process related to its business to a 3rd party service provider. The concept of BPO comes from the fact that the companies want to concentrate on the core competency and can outsource other important but non-core processes to third-party service providers. Knowledge process outsourcing (KPO) and Legal Process Outsourcing (LPO) are now emerging as important subsets of BPO.

Thus, Business process outsourcing, or BPO, is a business practice in which one organization hires another company to perform a task (i.e., process) that the hiring organization requires for its own business to successfully operate.

Advantages of Business Process Outsourcing

  • Focus on Core Competency.
  • Reduction in Costs.
  • Increase in efficiency of the business process.
  • More Employment generation.
  • Focused teams solving problems.
  • Business process speed and efficiency are enhanced.
  • Employees may invest more time in core business strategies to bolster competitive advantage and enhance value chain engagement.
  • Organizational growth increases when capital resource and asset expenditures are not required, which averts problematic investment returns.
  • Organizations are not required to invest in unrelated primary business strategy assets, facilitating a shift in focus to specific competencies.

Business Process Outsourcing

Disadvantages of B.P.O

  • Over-dependence on third-party vendors.
  • Lack of complete knowledge of product/service offering leading to customer dissatisfaction.
  • Less focus on quality because of lower-cost offerings through outsourcing.
  • Data privacy breaches

Examples of B.P.O

There are many companies that are using many outsourcing their requirements for improving their business successfully. In that some examples are:

  • Call Center Outsourcing.
  • Knowledge Process Outsourcing (KPO).
  • Data Entry Outsourcing.
  • Financial Services Outsourcing.