Learn more about business process outsourcing

The Internet revolution started a series of cascading effects in information technology; Business Process Outsourcing (BPO) is one of them. The term refers to the method of using third-party services to take care of your own business operations that require honed skills. In its earliest form, business process outsourcing applied primarily to manufacturing companies, for example soft drink manufacturers using outsourcing for their supply chain systems; However, since the technology has practically taken over the world, it is now applied to a large number of services that primarily use the Internet to complete tasks.

The word ‘outsourcing’ became a buzzword in business circles in the mid-1990s. Outsourcing means the process of hiring the services of a third party service provider for various business operations. Coinciding with the Internet revolution, BPO went on to indicate the process of “harnessing the skills and experience of technology providers in low-cost economies to perform internal tasks that were once the responsibility of a particular business enterprise.” Simply put, it denotes the process of changing internal job functions or delegating non-core operational jobs to an external company (contractor or subcontractor) to an external company in a different geographic location that specialized in a particular process or operation. Outsourcing helped companies focus more on core competencies and gain advantages by saving on infrastructure and personnel costs. These providers set up ‘call centers or help centers’ in their own countries equipped with infrastructure and staff; the entire installation was contracted out to the company doing the work. Outsourced processes as part of BPO included data entry, billing, medical transcription, payroll processing, etc. The outsourcing process was adapted to 1st world countries like USA, UK and Europe which transferred jobs to 3rd world countries mainly in Asia like India, China, Malaysia, Philippines etc. By outsourcing, they benefited from paying low wages and salaries to contract labor rather than paying high-cost wages and benefits to internal or local employees.

Business process outsourcing (BPO) is also generally known as ‘offshore outsourcing’, as the outsourcing process is sent to another country. The term ‘nearshore outsourcing’ is used to refer to business operations subcontracted to a neighboring country.

Business process outsourcing (BPO) used to be known as a subset of process outsourcing that involved the operations and responsibilities of specific business processes and applications to a contracted third-party service provider; it is now used more in the context of information technology enabled services (ITeS).

BPO is generally classified as front-end outsourcing to denote areas that involve customer-focused services such as contact centers, billing centers, etc.; Back-end outsourcing indicates the internal functions of the business area of ​​a company, such as accounting, finance, human resources, etc.

Very often BPO services involve IT and ITeS; Two important sub-segments of the BPO industry are Knowledge Process Outsourcing (KPO) and Legal Process Outsourcing (LPO).

Benefits and limitations

Benefits:

• Improves the organizational flexibility of the company

• Transforms fixed costs into variable costs

• Increases focus on core competencies

• Speed ​​up business processes and maintain business agility.

• Maintain growth objectives avoiding commercial bottlenecks.

• Less capital expenditures and outlays

restrictions:

• Non-compliance with service levels

• Unclear contractual issues

• Unforeseen changes in requirements and changes in costs

• Dependency on outsourcing that can affect internal functions