Business Process Outsourcing
What is the Business Process Outsourcing Concept?
What do you understand by the term Business Process Outsourcing?
Whether you are new to the world of computers or information technology or are a pro at it, one term that you must have heard innumerable times is that of business process outsourcing (BPO). While people often give varying explanations of a BPO and how it works, you really need to know as to what is business process outsourcing (BPO)?
Before you come to know about what is business process outsourcing (BPO), it is essential to know that large organizations and companies have several departments to handle. Each of these departments has its own work and there may be a lot of paperwork involved. Employees engaged in these departments have to sort out the entire data and come up with meaningful information so that the management is able to take informed decisions. However, any delay in the collection, assembling and sorting of data can make the entire process go haywire. Here is where the concept of business process outsourcing steps in.
Business process outsourcing (BPO) can be defined as a concept where large companies or organizations outsource their backend office work to third party service providers that have been established for the sole purpose of handling such work. While saving of time and effort on the part of the employees is a major reason for the outsourcing of the business processes of companies, another very important reason that has given impetus to the BPO industry is that of cost saving.
Types of Business Process Outsourcing
Business process outsourcing can be mainly divided into two parts. One is back office outsourcing that includes outsourcing the internal business functions of the organizations and may include billing, accounts, human resources, finance or purchasing. The second type of BPO services is the front office outsourcing and includes customer related functions like technical support, customer care and marketing.
Another classification of business process outsourcing is by way of the place where the tasks or business functions are outsourced. If the business functions have been outsourced to a company in another country, then this type of BPO services are called offshore outsourcing. If a local or a company within one’s own country is contacted for the fulfillment of business functions, the services are called onshore outsourcing.
Benefits of Business Process Outsourcing
Companies opting to use the business process outsourcing (BPO) services stand to gain several benefits from this setting. Companies in the west mainly the US, the UK and Europe opt for business process outsourcing services. The south East Asian countries including India and Philippines are the hub of business process outsourcing. Here are the benefits that the companies in the west seek when they outsource their business processes:
The cost factor is the prime reason for this shift of business processes from one country to another. Wages in India and other Asian countries is far less than what the countries in the west pay to their employees. Therefore, these companies stand to gain even after outsourcing the work rather than getting it done in-house. Secondly the different time zone helps the companies get their back end work done in real time and they get the required information on time.These and several other benefits help companies gain from business process outsourcing (BPO).