BUSINESS PROCESS OUTSOURCING: How Not to Put All Eggs in One Basket - De-Risking Strategies for Outsourcers

BPO (business process outsourcing) is a business activity in which a company hires an outside service provider to complete a critical business task.

Typically, an organisation begins by identifying a process that is required for its operations but not part of its core value proposition in the market; this phase necessitates a thorough understanding of the organization's processes as well as effective business process management.

Payroll and accounting processes, for example, are suitable for BPO since they are conducted the same or similarly from company to firm.

Because these commodity operations don't usually distinguish one company from another, business leaders often decide that having their own employees conduct them isn't worth it. Companies believe that outsourcing these procedures to a business that specialises in them will produce better outcomes.

The origins of BPO can be traced back to the manufacturing industry. After determining that third-party vendors could offer more skills, speed, and cost efficiency to the process than an in-house team could, manufacturers hired them to handle aspects of their supply chains. Organizations in other industries eventually embraced the practise.

Organizations of many types — for-profit enterprises, nonprofits, and even government agencies — now contract with BPO service providers in the United States, throughout North America, and around the world to conduct a variety of tasks.

What is the purpose of BPO?

Business process outsourcing is used by companies for two types of tasks: back-office and front-office operations.

Accounting, information technology (IT) services, human resources (HR), quality assurance, and payment processing are examples of back-office tasks, sometimes known as internal business functions.

Customer service, marketing, and sales are all examples of front-office tasks.

BPO contracts can entail outsourcing a whole functional area to a single vendor, such as the HR department. Specific processes within a functional area are frequently outsourced by companies. For example, a company might outsource payroll yet handle all other HR functions in-house.