BPO – Business Process
Outsourcing
Business process outsourcing – bpo means delegating certain business functions to a service provider. The business functions are primarily based on information technology services hence being referred to as Information Technology Enable Service or ITES – BPO. The subsets of business process include the Knowledge Process or KPO and Legal Process or LPO.
Typically, manufacturing firms outsource their business processes. Nowadays, however, the term is no longer exclusively associated with the manufacturing industry. As a matter of fact, service-oriented industries are more likely to outsource their business process.
The main reason why business processes of a company are outsourced to another firm is to save costs. Another reason is to attain efficiency. Most of the outsourcing firms hire and train their personnel to become efficient in their specific tasks. This will save the company time and money in hiring and training in-house staff.
There are basically two categories being outsourced – front office and back office.
Outsourced back office services pertain to certain internal processes such as accounting and human resources.
Front office outsourcing, on the other hand, is probably the most popular business function being outsourced – customer relations.
India tops offshore demands enjoying a 5 to 6 percent share of the total business process market. This translates to $10.9 billion income in BPO offshore. Other emerging major offshore business process providers are the Philippines and South Africa.
A huge part of the BPO work focuses on call centers that take care of matters pertaining to customer service. Getting a third party to handle customer service is believed to help grow the business. Customer support helps build and enhance brand awareness.
Also, a call center can provide services other than providing customer support. One of the many call center services is to manage telemarketing. This can help the company generate more sales. Since the telemarketing process is handled by a third party service, the business is able to focus on its core competencies such as developing better products or making operations more efficient.
Hiring a third party provider for the business processes also helps the company become more flexible. In financial aspects, flexibility is demonstrated by the fact that services such as call centers charge per service. This means that instead of paying fixed salary to in-house staff, the company is paying a variable fee to an outside service. Variable fees help the company become more flexible in their costing. For example, if the company wants to lower the costs of their products, one way of attaining that is to lower the cost of their outsourced service.
Another way that a service helps a business to become flexible is in its operations. Instead of investing huge amount of money in expensive equipment such as phone lines, computers and Internet, the business does not need to put up huge money to be able to provide efficient customer support or call center services.
The business however needs to proceed with caution when it comes to bpo business process outsourcing. It is important to be clear on the legal terms, the fees and the service expectations. If the service provided is poor, it will more likely hurt the business rather than help them.
