Business Process Outsourcing

Business Process Outsourcing Business process outsourcing (BPO) is the delegation of one or more IT-intensive business processes to an external provider that, in turn, owns, administrates and manages the selected processes based on defined and measurable performance metrics. BPO offerings are categorized into two major categories: horizontal offerings (those that can be leveraged across specific industries) and vertical-specific offerings (those that demand specific industry vertical process knowledge).

What is BPO used for?

Organizations engage in business process outsourcing for two main areas of work: back-office functions and front-office functions.

Back-office functions, sometimes called internal business functions, comprise support operations including accounting, information technology (IT) services, human resources (HR), quality assurance and payment processing.

Front-office functions are processes and business operations that serve or relate to existing and potential customers, such as customer relation services, marketing and sales.

Some organizations outsource an entire function, such as the HR department, to a single vendor. Other companies outsource only specific processes within a functional area, such as payroll processing, while having their team perform all other HR processes.

Commonly outsourced processes include the following:

•  payroll and accounting
•  administration
•  customer support
•  IT management and services
•  manufacturing
•  marketing
•  research
•  sales
•  shipping and logistics

Some companies also outsource strategic tasks, such as data mining and data analytics, both of which have become essential elements for maintaining a competitive advantage in a digital economy.