What Is Business Process Outsourcing (BPO)?

Outsourcing is a popular practice across the globe as it has several benefits like lower costs, access to the latest technology, high quality service, and industry expertise. Various business functions can be outsourced, whether it is customer service, recruitment or finance.

When talking about outsourcing, many tend to consider outsourcing for specific tasks as opposed to entire business functions. However, there is a shift from this belief, with several organisations now looking at business process outsourcing or BPO.

Those who are not familiar with the practice may wonder what business process outsourcing is.

What is BPO?

Business process outsourcing or BPO refers to the practice where one or more business functions are outsourced to a third-party company entirely. For instance, an organisation may decide to outsource marketing or customer support to a BPO company.

BPO is also known as subcontracting or externalisation. When answering the question, what is BPO, is it important to differentiate between outsourcing in general and business process outsourcing, as the latter looks at outsourcing a business function as a whole.

What is a BPO company?

A BPO company specialises in carrying out the responsibilities and tasks of one or more business functions for another company. A BPO company may focus on specific business functions, for instance, a BPO call centre which will carry out an organisation’s customer service functions.

There are three key types of BPO service providers. Offshore service providers are located outside the company’s country, while nearshore service providers are located in neighbouring countries to the company.

Onshore vendors are located in the same country as the company but not necessarily in the same city.

There are two main areas that an organisation may use business outsourcing for. The first is back office operations, which includes functions like IT services and quality assurance. The second area is front office operations, which includes marketing and sales.

Business functions like marketing and sales require direct contact between the company and the customer. This makes customer service an important front office operation that has pushed industry leaders to ask what BPO is in a call centre and how a company can outsource their customer support function to a third-party service provider.

What is BPO in customer service?

While business process outsourcing is used for various business functions, it can be argued that customer service is an area that benefits significantly from business outsourcing. If you struggle to maintain an on-site customer service department, you may find yourself constantly asking yourself, “What is BPO in a call centre?”

A BPO call centre handles calls for other businesses. These calls may range from telemarketing and lead generation to customer service and order processing.

There are two types of calls a BPO call centre will handle. Inbound calls refer to calls where the customer initiates contact with the company whether it is to place an order, have food delivered to them, or make inquiries about a product.

Outbound calls, on the other hand, are those where the company initiates contact with the customer and is typically for sales and marketing but can also be for market research.

If your company interacts with customers, you are likely to require both inbound and outbound call outsourcing services and a BPO call centre can be of great benefit to you.

Benefits of BPO

There are several benefits to business operations outsourcing. One of the key benefits that attracts companies to BPO is the reduced costs of the practice. If a company is required to establish and maintain an on-site customer service department, for instance, they will spend heavily on recruitment, infrastructure, overhead costs, human resources, and technology.

In addition to this, a company may not have the budget to hire the best in the industry and may thus have to settle for a subpar service despite a high investment.

By outsourcing the business function to a BPO service provider, the company can access industry expertise and the latest technology while also not having to spend on recruitment, utilities or human resources.

A company can also allocate these resources on core business functions that cannot be outsourced to a third party. This would increase the efficiency and productivity of the company, while also guaranteeing the efficiency of their call centre services.

Scalability is another key benefit of business outsourcing that makes many companies opt for BPO.