What is BPO?

Many businesses rely on outsourcing. Often, this simply involves allocating specific tasks to external service providers. For example, it could mean hiring a freelancer to work on a particular project. However, there is also another, more comprehensive, type of outsourcing that companies can take advantage of – and that is BPO.

But what exactly is BPO, and is it something that could benefit your business? Keep reading to find out.

What does BPO stand for?

BPO stands for business process outsourcing. Originally, this type of outsourcing was typically only done by manufacturers. It often involved companies outsourcing large segments of their supply chains to third parties. However, BPO has become increasingly popular among organisations of various different kinds, including service sector companies.

What is business process outsourcing?

Specifically, business process outsourcing refers to the outsourcing of entire business functions to external providers. For example, this could involve a company delegating all of its marketing or recruitment activity to a third party. The scale and scope of BPO is what sets it apart from other types of outsourcing.

Businesses can use BPO for either back-office functions, like accounting, or front-office functions such as customer service. The third-party service provider owns and administers the relevant process on behalf of its client.   

What are the benefits of BPO?

There are many benefits associated with business process outsourcing. For example, by taking what are often complex and resource-intensive tasks off companies’ hands and giving them to specialist service providers, this approach can result in significant cost savings. This is because it is often much cheaper for specialist companies to complete the relevant tasks – and the cost savings achieved can be reflected in the price businesses pay to their BPO providers.

It also means organisations can access the top talent and latest technologies in the relevant business processes without having to invest in this themselves. BPO service providers typically specialise in one business function and are experts in what they do. They also often use the most advanced and innovative software and systems.

Another advantage of this type of comprehensive outsourcing is that it frees up more time for businesses to focus on their core objectives without having to divert time and energy into other tasks. BPO is highly scalable too. These solutions can expand or contract in sync with companies’ needs. So, if organisations go through quiet spells when they don’t require as many resources for a particular business function, they don’t end up wasting money on fixed overheads.

More generally, thanks to a combination of the advantages mentioned above, using BPO can provide organisations with a competitive advantage over rivals that fail to take advantage of these services. It can make businesses more agile and responsive, and it helps them to operate more efficiently.

How many types of BPO are there?

When people talk about the different types of BPO available, they are generally referring to the following categories:

  • Offshore – This means using a third-party BPO provider based overseas. For example, a company in the UK might use a BPO specialist located in India.
  • Nearshore – This refers to using a BPO specialist located in a separate country, but one that is nearby. In the case of the UK, this could mean using a service provider situated in Ireland, for example.
  • Onshore – This is when a company outsources a business process to a specialist service provider within their own country. It’s also sometimes called domestic BPO.

What is an example of business process outsourcing?

There are many different examples of business process outsourcing. Essentially, any business function that companies have to complete can be delegated to a third party. As mentioned previously, in the case of manufacturers, this might mean outsourcing entire sections of their supply chains, while companies of all kinds can use BPO for administrative tasks such as bookkeeping or HR processes.

Another common example is customer service outsourcing. A fully outsourced customer service support package could include a virtual receptionist service for answering and forwarding calls, resolving basic customer enquiries, scheduling appointments and so on. It could also feature outbound call centre services, live chat management and more.

By delegating these essential customer service tasks to a specialist third-party provider, companies can ensure that consumers get the responsive, supportive service they expect – without organisations having to spend lots of time and effort on this aspect of their operations.