So what is BPO exactly? BPO or Business Process Outsourcing, is a way of contracting out business-related operations to a third party. The term was originally associated with manufacturing firms that outsourced parts of its supply chain such as Coca Cola, but it now encompasses many sectors of business.
Modern BPO can be segmented into three areas: (1) Back-office outsourcing, which includes HR, finance, data entry and accounting, (2) Front-office outsourcing, which includes customer service, sales, and market research, and (3) Global industry services such as travel, telecom and media.
Organizations that decide to outsource part of their business process do so because they don't have a large enough labor force in some sections, it's cheaper, or they just need the time to focus on more critical parts of their business. For companies considering BPO as an option for their own company, they should take into consideration both the pros and cons of BPO:
1. Higher efficiency
The workforce is trained and skilled in focus areas, so they aren't having to multitask. Plus, they have greater access to professional training and expertise.
2. Cost and time effective
Saves the company who is outsourcing on infrastructure and technology, and resources related to staffing and training. This is usually the primary benefit for businesses who decide to outsource.
3. More flexible
BPO companies can quickly gain access to the right resources - whether technology or otherwise, to easily grow with your company and meet changing business demands.
1. Loss of fine control
Employees are not as accessible as in-house employees, making it more difficult to maintain an level of quality if the third party does not hold the same standards. For some, this may cause communication issues that delay project completion.
2. Lower than expected savings
If the third party is poorly staffed or managed, or not the right fit for the company, the cost savings might not be as high as first imagined, and customer dissatisfaction is a possibility.
3. Information security
Data theft or security breach of information can be an issue for companies without a secure information security policy in place.
Outsourcing should be considered part of a companies planning and budgeting process. When used for the right reasons, and with the right third party vendor, outsourcing can have long-term value for both the companies and the clients that they serve.