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.
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.