Business process outsourcing (BPO) happens when a company outsources entire business functions to be handled by another company. For example, companies can outsource their marketing, payroll, human resources (HR), customer service and supply chain management functions. BPO is distinct from information technology (IT) outsourcing which focuses on hiring a third-party company or service provider to do IT-related activities, such as application management and application development, data center operations, or testing and quality assurance.
What is Business Process Outsourcing?
Business process outsourcing involves the outsourcing of business functions to external companies. To clarify, many companies outsource tasks to external providers. An example may be hiring a freelancer to do video editing. BPO is different in that whole business functions, such as marketing or accounting, are outsourced. Traditionally, BPO was used by manufacturing companies but it has more recently spread to a variety of industries (Alana Rudder).
What is BPO used for?
Most organization engage in Business Process Outsourcing for two main areas of work: Back-office function and Front-office functions.
Back-office function compromises support operation of management services involving the management of entire business processes for our clients which includes accounting, information technology (IT) services, human resources (HR) and payment processing.
Front-office functions are business operation that relates to existing and potential customers, such as customer relation services, marketing and sales.
Some organization outsource an entire function, other companies outsource only specific processes within a functional area such as only payroll processing, while having their own team perform all other HR processes (Mary K. Pratt).
Some commonly outsourced processes includes:
Payroll
Manufacturing
Customer Support
Sales and Marketing
Administration
Tech/Office support
Research Analysis
Logistics
According to Deloitte’s “2021 Global Shared Services and Outsourcing Survey Report,” the most frequently outsourced functions are IT, finance and payroll.
Some benefits of Business Process Outsourcing
- Cost savings: BPO providers can often perform a business process at lower costs or save the company money in other ways, such as in tax savings.
- Improved flexibility: BPO contracts can offer the ability to modify how an outsourced business process is done, enabling companies to react more nimbly to changing market dynamics.
- Specialized Risk Management: Companies that outsource business functions can potentially reduce risks by putting those areas of their businesses in the hands of tried and true experts who know how to avoid relevant risks.
- Access to Top Talent: Many BPO companies hire talent with extensive backgrounds and credentials in the area in which they specialize, such as HR or payroll. Hiring top talent means they can compete for clients against other BPO companies. It also means the businesses that hire them gain access to the expertise within that top talent.
- A Greater Competitive Advantage: With access to innovative technologies, specialized expertise, cost savings, advanced and quick reporting, specialized risk management and opportunities for greater operational flexibility, companies are better able to develop competitive edges against competitors that may not have such access.
How Business Process Outsourcing works
Alana Rudder stated in her article that Business process outsourcing begins when a company determines it can gain a benefit from outsourcing a business function, such as marketing, accounting or supply chain management, to an external company. The company then begins researching different companies that specialize in performing the needed business function. Often, the searching company will contact more than one BPO company to determine the best fit.
Once a company has reached out to a considered BPO company, a conversation begins. Many BPO companies determine the needs of the client company, then tailor a solution to those unique needs. In this way, often, no BPO-client relationship is exactly the same. The BPO Company will then draw up a contract, often called a master service agreement (MSA) or a service-level agreement (SLA) that gives a broad overview of the terms of the agreement.
Once the client company receives these broad contracts from considered BPO companies, its decision-makers decide which BPO company offers the best value and hires one. A backup BPO company may also be selected in case the primary BPO Company is not able to deliver as expected.
Once a BPO company is hired, more granular agreements may be drawn up to cover how each project will be handled by the BPO Company. Such a granular contract is often called a statement of work (SOW). The relationship then continues based on the specifications in the SOW. In particular, the SOW may be revisited and revised when needed to ensure an optimal ongoing relationship between the client and BPO provider.
READY TO TAKE THAT STEP?
Business process outsourcing is a subset of outsourcing that involves the contracting of the operations and responsibilities of a specific business process to a third-party service provider.
Our services are custom tailored to each client’s business model and their end customer needs and are typically provided via multiple delivery centers throughout the nation. Our expertise includes process expertise, analytical capabilities, consulting processes, technology expertise, including our
ntellectual property platform, and operational insight arising from managing complex processes in diverse industries for numerous clients.
With our BPO service; for a low hourly or monthly fee, you can have a full-time dedicated employee (or a team of employees) with the exact skills and experience needed for any size task. Your contracted employee(s) will have excellent communication skills, empathy, work ethics and professionalism and be computer literates. Outsource Nigeria Omni Channel can provide you with temporary or permanent contracted employees. For more enquires, visit www.outsourcenigeria.com.