What Is Business Process Outsourcing (BPO)?

Business process outsourcing (BPO) is when a company hires a third-party business to take care of certain parts of their operations.

How Does Business Process Outsourcing Work?

Business process outsourcing (BPO) varies depending on the needs of a business. For example, an organization might choose to outsource its HR or accounting processes to be able to focus on core activities instead.

Typically, businesses choose to outsource administrative and non-core functions.

What Are the Benefits of Business Process Outsourcing?

The benefits of business process outsourcing include:

  • Increasing operational flexibility
  • Reallocating time and resources on core activities such as customer relations or product development
  • Gaining productivity advantages over competing businesses
  • Reducing cost of operations
  • Accessing better technologies
  • Benefiting from better reporting

What Are the Drawbacks of BPO?

The drawbacks of BPO include:

  • Increasing data breaches possibilities
  • Having communication issues
  • Underestimating business process outsourcing costs
  • Affecting the reputation of the company
  • Reducing control over operations

What Are Examples of Business Process Outsourcing?

Examples of business process outsourcing include:

  • Payroll
  • Marketing
  • HR
  • Call center customer service
  • Supply chain management
  • Accounting
  • Research and development
  • Sales
  • Prospect new clients
  • Information technology (IT)

What Are Different Types of Business Process Outsourcing?

The different types of business process outsourcing include:

  • Local outsourcing: hiring a nearby company
  • Offshore outsourcing: hiring a company in another country, typically were labor costs are lower
  • Nearshore outsourcing: hiring a company in a neighboring country

What Is the Difference Between BPO and BPM?

BPO is the acronym for business process outsourcing while BPM stands for business process management.

The difference between BPO and BPM is that BPM aims at improving the overall processes of a business without necessarily hiring a third-party company. BPO refers to hiring a company to take care of and manage one specific aspect of the operations of an organization.

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