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How Business Process Outsourcing is Advantageous for Your Company

Moiz Khan Nov 14, 2019

Business Process Outsourcing (BPO) services are booming worldwide. With technologies evolving at breakneck speed, collaborating and working with teams across the other end of the world is becoming all the more important.

What is Business Process Outsourcing?

Business process outsourcing (BPO) is the outsourcing to a third-party provider of non-primary business activities and functions. BPO services typically include payroll, human resources (HR), accounting and relationships between customers and call centers.

It is a sub-set of outsourcing that entails hiring a third-party service provider with the operations and liabilities for a specific business process. Nonetheless, it should not be confused with the outsourcing concept as a whole. With BPO, the difference is that you outsource a complete business function (for e.g., all lead generation), rather a single job (suppose, recruit a VA from a developing country).

Most organizations adopt BPO for two main functions:

  • Back office functions – A company’s department which does not involve customers or the public directly such as procurement, payroll, IT services human resources, quality assurance, or payment procedures.
  • Front office functions – A component of business operations directly involved with the customer. It includes customer support, marketing, and sales.

Types of Business Process Outsourcing

Business Process Outsourcing is not confined to just one specific location. It is a global service that works with various businesses around the world.

It is categorized into three main categories:

  • Onshore Outsourcing– Outsourcing onshore is performed domestically. A company employs or contracts a BPO system within their own country.
  • Offshore Outsourcing– This type of outsourcing is done when a business hires or contracts a BPO business overseas.
  • Nearshore Outsourcing– When a company hires or contracts with neighboring countries, this type of BPO occurs. For instance, America outsourcing Mexico.

Benefits of Business Process Outsourcing

How companies outsource their business processes is not difficult to understand. Business process outsourcing helps business owners to reduce the workload and focus on other fundamental aspects of their service. There are a number of advantages for outsourcing the business processes. Some of them are listed below:

Cost Reduction

Outsourcing reduces costs for in-house staff, particularly for recruitment and training and for accommodating local employees in the workplace. An outsourcing company physically located in a developing country is leveraging labor markets at a lower cost. Finally, outsourcing allows businesses to use variable-cost frameworks, such as fee-for-service programs, rather than fixed-cost models needed to retain local employees.

Noncore Functionalities Specialization

 Outsourcing companies are specialists in what are considered as non-core functions of other corporations’, empowering their clients with world-class capabilities. An outsourcing company that invests in advanced processes and technology can provide its clients with cutting-edge developments. For instance, a game design company might not want to pay for the latest payroll program on the market, but an outsourcing company that offers payroll services will probably make the investment to improve both its own efficiency and that of its customers.

Global Expansion

Existing hurdles such as language barriers and discrepancies in marketing strategies can be a challenge for most companies due to the diversity of cultures. Business process outsourcing can be a strength as a business may easily find local partners with native workers to overcome cultural and linguistic differences between two businesses from different countries.

For example, if you chose to join the French market, then you would have a very difficult time getting started; you can’t recruit the American sales team because of the language barrier. Therefore, to actually start a regional department, you will have to bring someone from the company management. This leads to some other concerns – although the official company is fluent in the language, it is doubtful that they will understand how the market works in that particular country.

Therefore, having a local partner company with a local workforce is better. They already have the understanding of how the market is working, as well as getting on their hand the understanding of language and culture.

Speed and Efficiency

Organizations that outsource processes tend to encourage experts to handle certain tasks, save time, increase reliability, and maximize efficiency. A BPO specialized in record keeping, for example, can automatically catalog files, make them available for retrieval and keep an organization in accordance with legal requirements. This substitute manual entry and storage of data.

Customer Service and Feedback

Many BPO workers have direct contact with customers, which allows them to provide a first-hand input on goods and services. In addition, this important feedback helps the company improve its products.

The BPO business would also manage voicemail systems, appointment scheduling, email services, marketing system, telemarketing, surveys payment processing, order processing, quality assurance, customer support, contract maintenance, and other feedback from customers.

Competitive Advantage

Companies employing BPO services have become more competitive owing to the expansion to global and local markets. It is because with greater accuracy, efficiency and speed, the BPO provider executes the processes. all operations are done on the best possible level.

Latest Updated Technologies

It is very expensive to purchase a licensed version of the latest software and other technologies. This solution is also costly, especially for small- to medium-sized enterprises that are unable to afford to purchase the latest technologies on a shoestring budget. Thus, staying updated with the latest developments is challenging for a business. Outsourcing with companies that already have access to the technology and therefore have the necessary skills is more effective to international organizations.


Looking into The Future

BPO industry has seen tremendous growth over the years due to the numerous advantages. It is estimated that this progress will also be seen in the coming years. The BPO industry is currently responsible for generating the second highest number of jobs, and the worldwide BPO market is expected to hit a whopping $400 billion by 2020.

Currently, with in-depth data analytics at their disposal, international businesses are prepared to substantially improve their products and services, while ensuring that professional outsourcing service providers take good care of backend tasks. Because of this, opting for BPO services in the near future will become a desirable solution for small- and medium-sized businesses alike.