What is BPO? BPO Examples, Categories, Types and Benefits.
Every successful business has the ability to adapt, problem solve, and find more efficient ways of conducting their daily operations. In fact, the ability to identify problems and find innovative solutions is key to business success.
But it’s not enough to just fix problems when they come up. It’s also important that companies are working to improve business processes before there’s a problem. You want to have continued growth and improvement, not just stay the same.
One of the most popular and effective methods of streamlining businesses is adopting a BPO model for select functions. But what is BPO and how can it help your business? Keep reading to find out.
BPO = Business Process Outsourcing
BPO is an acronym that stands for business process outsourcing. Put simply, it is the practice of hiring another company to perform a process that your own business needs to operate. You’re using a third-party to handle non-primary business activities for your company.
Companies make the choice to outsource when they decide a specific task can be better accomplished if outsourced than if the company staffs and pays for those needs themselves. Companies outsource many tasks including accounts payable, customer/call center relations, document management, human resources (HR), payroll, and social media marketing.
To learn more about the difference between business process outsourcing (BPO), robotic process automation (RPA) and business process automation (BPA), please read this article:
For Example …
Payroll is routinely handled with BPO. It’s one of the most common items that every business needs and also one of the most often outsourced. Instead of paying to staff and operate an entire payroll department, you outsource to a company that specializes in managing such affairs.
Take, for instance, a company that makes children’s toys. Instead of taking time away from their core business process to manage payroll in-house, this company would instead outsource their payroll responsibilities to another company. In this way, the original toy manufacturer can save on money, resources, and valuable production time by making use of BPO practices. They get to focus on their specialty (making toys) while the outsourcing company focuses on their specialty (streamlining core business processes for other companies).
When companies refer to business process outsourcing, they often sort the type of work that they’re outsourcing into two categories. These categories are back office outsourcing and front office outsourcing.
Back office outsourcing is the form of BPO which deals primarily with in-house necessities of business such as payroll, billing, or similar tasks. Front office BPO refers to outsourcing tasks that include customer services such as marketing or tech support. Your company might benefit from one or both types of outsourcing depending on your specific needs.
Types of BPO
We can also define BPO by the geographical location of the third-party outsourcing business. When most people hear the word “outsourcing” they think of the most common type of BPO: offshore outsourcing. With offshore outsourcing, your company hires a company located overseas to fulfill certain work requirements. One example is a company based in the United States outsourcing to a company in India.
There are other BPO categories beyond offshore. Nearshore outsourcing happens when you contract work to a neighboring country. An example of this is if your company is in the USA and you outsource to Mexico. You can also outsource work to another company within your own country. This is called onshore outsourcing. An example is when a USA-based company hires a USA-based outsourcing firm.
Benefits of BPO
Business process outsourcing can do a whole lot of good for your company. Benefits include
- Reduced costs – you don’t have to pay in-house employees for these tasks or spend the money to keep equipment up-to-date.
- Increased security – outsourcing companies specialized to handle financial processes can often provide better security from cyber theft, especially if you’re a small business.
- More efficiency – outsourcing companies can specialize in and streamline core business processes much more easily than an in-house department could.
- Improve vendor relations – since outsourcing helps speed-up business processes, your vendors receive faster turn-around.
- Better coverage – outsourcing firms cross-train multiple employees so you never have to worry about falling behind if someone calls in sick.
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BPO And Your Business
No matter what category BPO falls under, outsourcing common business practices to third-party companies is one way that modern businesses have found success. And it’s more than likely that outsourcing will remain in the long-term business models of many organizations.
But what about your company? Are you using BPO to optimize your business yet? If you’re not, then maybe it’s time to explore your options. NextProcess is a USA-based company that offers business process outsourcing as well as automation services. Click here to learn more, or here to contact us and request additional information.