Successful businesses are efficient and have robust business processes. To attain success, companies rely on the BPM (Business Process Management) to manage their processes. Using BPM, business processes can be optimized and made efficient for better delivery of services. This benefit gives rise to an entire BPO industry and services related to it.
What is BPO (Business Process Outsourcing)?
Business Processing outsourcing is a third-party service for organizations to delegate tasks that a company considers but can’t manage itself due to cost or lack of resources. The services can include social media marketing, accounting, payroll, customer services, telemarketing, and more. Typically, BPO fills supplementary function as opposed to core function. These services can be both technical and non-technical.
Broadly, BPO can be divided into two: front office and back office. The front office deals with the company’s customer-related services like customer service, marketing, etc. Back office, on the other hand, pertains to document work, billing, etc. Businesses combine both to create seamless business processes.
Based on the location, a BPO can be divided into three categories. A total business process optimization can be achieved by combining the following three categories.
1. Offshore BPO – The location of BPO is outside the company’s country. For instance, a U.S.-based company may hire a BPO in India.
2. Nearshore BPO — The location of BPO is in the neighboring country. A U.S. company may hire a Mexico –based BPO.
3. Onshore BPO – The location of BPO is within the same country as the client. However, it might be in a different city than the contracting (client) company location. For instance, A settle –based company may hire a BPO in Seattle, Washington, or Huntsville, Alabama.
Benefits of Business Process Outsourcing
One of the major benefits of outsourcing is that the U.S. corporate tax is one of the highest in the developed world (39.1 percent). So companies benefit from outsourcing as they are liable to pay taxes of the host country. The following are additional benefits that BPOs can offer.
1. Decreased cost – Outsourcing to developing countries leverages low-cost labor. Companies also benefit from the low operations cost and staffing and training related cost. Additionally, outsourcing allows companies to offer fee-for-service plans instead of fixed-cost models, required to retain local employees.
2. Focus on core areas – Outsourcing enables companies to focus on core functions of the company while allowing BPO professionals to take care of other operational aspects. Though these functions aren’t directly tied to the growth of the company but are essential to the overall smooth functioning of the organization. This allows companies to focus on their core function and develop a competitive edge
3. More flexibility – Companies have the flexibility to act faster when they are launching new products and services as they can assign their internal staff to critical roles while supporting functions are being taken care of by third –parties. Companies also have the benefit of getting better results in their non–core functions as BPO professionals are fully trained to do their as best as possible, resulting in good results.
4. Increase in efficiency and productivity – In the BPO industry, outsourcing firms specialize in particular functions which enables them to act fast and be more productive than a company can ever be, producing greater results. For instance, a BPO specializing in record management will be able to do curate records and prepare sheets for use much faster than a telecommunication company can ever do.
- Global expansion – Outsourcing companies have multiple delivery centers spread over multiple locations. Companies looking to offer their services in multiple languages, around the clock, can benefit from these outsourcing companies. This way they won’t have to set up their own service center and can rely on BPOs to do the job.
BPOs offer a lot of benefits to companies. This is why more and more companies – enterprises and startups – alike are looking to outsource their business functions. Consequently, the BPO industry is steadily expanding across the globe. Additionally, the industry contributes to the economy of developing countries like the Philippines, Vietnam, and is improving the living of the country’s residents.