Business Process Outsourcing (BPO): Definition, Types And Benefits

Back Office Outsourcing is a form of outsourcing that deals primarily with in-house business activities that include data entry, internet research, data collection, data analysis, order processing, payment posting, quality assurance, information technology services, billing, etc.

Front office BPO refers to outsourcing customer-support tasks such as marketing, sales, tech support, customer services, grievances redressal, etc.

When an organization hires a service provider located in a different country to fulfill certain work requirements, it is known as offshore outsourcing. For instance, a US-based agency outsources its business functions to a company in India.

Nearshore outsourcing happens when a company outsources its business functions to a company in a neighboring country. An example of this is a Canadian company that outsources its selected business functions to a US company.

When a business outsources its non-core functions to a company located in the same country, it is known as onshore outsourcing. For example, when a US-based agency hires an outsourcing firm in the USA.

It is very important to have a clear understanding of the business processes that need to be outsourced. Without specifications, it will be difficult to find the perfect outsourcing partner. Moreover, the partner company should understand what the job entails and the project specifications.

The most crucial step in picking the right vendor is to decide on the selection criteria while evaluating them based on them. The criteria that can be used while selecting your BPO service provider are as follows:

• Areas of Expertise of the BPO Company
• Services offered by them
• Employee Strength of the firm
• Cost of their services
• List of clienteles

Based on your evaluation criteria, start shortlisting a few outsourcing agencies. Ideally, the shortlisted companies will be limited to three to five service providers that can be narrowed down further.

Once the process of shortlisting has been done, it is time to delegate pilot projects to each of them. This helps in assessing the firm’s ability to execute the tasks that will be given to the firm that will be hired.

This is the most crucial step in selecting the appropriate outsourcing agency. Evaluation can be done based on criteria such as:

• Quality of the Delivered Output
• The adaptability of the sudden updates in the project
• Turnaround time of the project
• Cost of the Services offered

Starting the project with the outsourcing partner is the first step. The work needs to be monitored closely while ensuring that the outsourcing firm can deliver your project on time.

The greatest benefit that organizations are experiencing while using BPO services is cost savings. Typically, in businesses, a large portion of their finances is incurred in manpower. However, it is not possible to perform all business within the company. Because it includes the process of hiring, onboarding, which is both time-consuming and expensive.

Hence, BPO can be a perfect solution for any size of firm in terms of allocating resources efficiently when it comes to employees and business processes. Since the outsourced third-party vendor is offsite, there is no need for concern about the manpower, office space, materials, etc. as they are maintained by the outsourcing partner.

It is a proven fact that organizations tend to stay in their wheel tracks for a longer time when they are outsourcing their non-critical business processes to an outsourcing partner. In this case, they can successfully manage their business criticalities more efficiently while paying almost negligible attention to the less complicated functions.

To be more competitive in the overseas market, it is of utmost importance for agencies to find and continuously improve their expertise and skills in the services and products that they are offering. With non-critical processes handled by outsourcing partners, organizations find more room to become more efficient with their products, thus tapping more customers in their respective target markets.

Efficient allocation of resources is the key to the success of any business. When a company outsources its business functions to vendors, it is likely that the vendor will spend time and expertise while delivering the project on time. Hence, they can allocate their resources to core business activities and employees for better performance.

With scaling businesses, often companies enter a foreign market. The most common problem that firms face that has businesses spread across the globe is the time zone. If the company is headquartered in Sunnyvale, then it will be difficult to expand their businesses in different countries in Asia and Australia when you can’t have employees available for each time zone in those countries. Instead of opening offices in various countries, it is more efficient and cheaper to hire a BPO service provider located in those areas.

Outsourcing firms that are specialized in handling financial services and processes provide better security and safety from cyber theft and cybercrime. For a small- to medium-sized business, it is difficult to hire a safety and security team to monitor security measures against cyber theft.

If a company wants to enter a foreign country, then for some activities it requires national law expertise, local market knowledge, knowledge of the target audience, and communicating with them. In this scenario, hiring a BPO company helps with quicker expansion and boosts efficiency. For example, if a US-based company is entering the French market, then hiring a local partner company with native manpower helps in greater business expansion.