BPO stands for Business Process Outsourcing. (BPO) can be described as a form of outsourcing in which a third party service provider is hired to execute some or all of the business functions within a business. This third-party service provider is accountable for executing all activities that are related to the business.

BPO is often referred to as subcontracting or externalization. It was originally utilized in the manufacturing industry, but is now employed for many business processes.

What is BPO Used For?

Companies contract with BPO vendors in two key areas:

Operations in the back office 

These are things like processing payments, IT services, payment processing Quality assurance, and so on.

Operation of the Front Office 

They comprise marketing sales, customer relations, sales and grievance resolution.

In many instances, companies outsource a few or all tasks. For instance, instead of hiring a full HR outsourcing company, the business may outsource only the payroll processes.

In the past few years over the years, the BPO sector has expanded significantly and provides a broad range of services and functions for companies.

Types of BPO

BPO companies can be classified into different types according to their geographical location:

Outsourcing onshore 

Outsourcing onshore is when an organization engages a provider of services that is located within the same country. It's also known as domestic outsourcing.

Nearshore outsourcing 

Nearshore outsourcing is when an organization engages a service supplier in another country.

Offshore outsourcing 

Offshore outsourcing is when an organization employs a service provider from an overseas country. It's also known as offshoring.

Benefits of BPO

Lower costs

One of the major reasons for companies outsourcing is cost savings. Instead of purchasing IT equipment or hiring employees to handle various tasks, they could outsource the work to an outsourcing service, which can reduce or even remove the overhead expenses. 

More efficient

BPO firms are skilled in various fields and work at the highest levels. They also follow best practices and utilize the latest technologies. This naturally leads to higher efficiency and higher productivity.

The focus should be on essential business tasks

Many businesses, mostly start-ups are faced with difficulties dealing with business ancillary activities. Transferring non-core operations to BPO companies gives the company the time to concentrate on its core business operations.

Global expansion

If a company chooses to expand into an overseas market, certain activities which require local market knowledge and expertise in the national law or proficiency with a different language may be transferred to BPO companies. BPO firm. It can help increase efficiency and speedier expansion.

Access to Specialist Skills

Outsourcing allows companies to gain access to specialization and skills which aren't readily accessible in-house. For instance, a company could outsource software development to an expert company in this field.

The Bottom Line

In the end, Business Process Outsourcing can be a good option for businesses looking to reduce costs, concentrate on their core business and get access to specialist skills. It has numerous benefits which can assist businesses in becoming effective and compete in the international market.