What Is Business Process Outsourcing?

The main purpose of every company is to constantly follow the innovations in the industry and increase performance and productivity. We know that there are periods when the company is faced with challenging situations, so they often decide to hire outsourcing partners. But what is business process outsourcing, and how can it help your organization in process optimization?

Keep reading as we will take you through all the details related to BPO, including the benefits, advantages and disadvantages.

What Is Business Process Outsourcing?

So, what is business process outsourcing? Business process outsourcing (BPO) is a type of outsourcing where a third party is hired to perform one or more functions in the company. This type of outsourcing can be found under the terms outsourcing or subcontracting.

Initially, this type of outsourcing was used in the manufacturing industry. Today, BPO is widespread and used by various businesses and for various business processes.

Source: freepik.com

Types of BPO

To understand the essence of BPO more easily, you need to know its categorization. Namely, several basic types of Business Process Outsourcing are divided according to the services they offer: LPO, KPO, and RPO.

LPO or Legal Process Outsourcing is used for legal processes. This type of outsourcing offers services such as preparing legal documents, offering advice, and doing certain research.

KPO or Knowledge Process Outsourcing is when the hired service provider needs to perform a specific function or task and provide an expert opinion on the matter. Companies contract work to KPO service providers whose staff have advanced degrees and expertise in the field they work in.

RPO or Research Process Outsourcing encompasses functions such as analysis and research. Marketing agencies, investment firms, and biotech companies usually do this type of outsourcing.

Types of BPO Services

BPO is also divided according to the service provider. Basically, there are three common types of outsourcing, such as:

Types of BPO Services	Explanation
Onshore outsourcing	The organization or company contracts services with a company operating in the same country.
Nearshore outsourcing	The organization or company contracts for services provided by companies operating in neighboring countries.
Offshore outsourcing	Occurs when an organization contracts services with a company located abroad.

Why Companies Opt for BPO

There are numerous reasons why many companies decide to outsource their processes. Some of the advantages include:

Reduced Costs

Time is a precious factor when a job needs to be done promptly and efficiently. By hiring an outsourcing service, companies can reduce costs and save money. This is also the main advantage of why companies decide on BPO. By outsourcing to a third party, companies can select services that can be performed efficiently for a relatively low cost.

Access to professionals

With the emergence of outsourcing services, companies have a choice when hiring professionals. In today’s globalized industry, you now have access to previously out-of-reach specialist talents. This way, your company will avoid unnecessary recruitment, training, and other additional costs.

Getting Feedback from Customers

One of the factors that make BPO attractive to companies is customer feedback. Namely, BPO employees are in direct contact with customers and clients and can get an honest opinion about the service, product quality, etc. In addition, they can receive useful information that can help improve the services offered by the company.

Access to the Latest Technologies

Buying new software or constantly updating it can be expensive, especially for small or medium-sized businesses. On the other hand, the latest technologies allow for following trends and offering quality services and products. Therefore, most companies opt for outsourcing services from companies that already work with cutting-edge technologies and constantly update their software with the latest versions. 

For instance, here at CLICKVISION BPO, our BPO experts use the latest cutting-edge technology to streamline processes and enhance customer experience.

Benefits of BPO

Hiring BPO services offers numerous benefits that can greatly benefit the company and its employees. In the following, we will consider some of these advantages:

Increased flexibility

We know that in business, there are certain ups and downs, so in that case, hiring a BPO company can be of great help. The outsourcing company can help you approach the problems to make better decisions. 

Focusing on the core business

By hiring an outsourcing firm, most services will be performed efficiently, while top management will be able to focus on the company’s core business. That way, employees will be more relaxed and more productive when important decisions are made for the company.

Increased efficiency

Your company can access the latest technologies and practices by hiring outsourcing services. Instead of investing money in upgrading the system and buying expensive equipment, the engagement of the BPO company will allow you to work more efficiently.

Global talent access

Access to experts and talent is another advantage of hiring a BPO company. Instead of spending money on recruitment and training, you can hire outsourcing experts familiar with your company’s current processes and apply the latest technologies and methods.

Furthermore, you can hire outsourcing experts from lower-wage economy countries, which would give you a top-notch outsourcing service and save time and money. By hiring a company from a foreign country to do the outsourcing it allows access to a more diverse and highly-skilled talent pool.

Challenges in BPO

Apart from the advantages, there are several challenges that you may face if you hire BPO services. In the following, we will focus on the most important factors:

Security

Security is the number one factor when working with a third-party company. When hiring BPO services, your company shares sensitive information and personal data that needs to be processed. In some cases, the security of such data may be compromised.

Communication problems

Language barriers can be a problem if you hire a foreign BPO company. Such communication problems can lead to receiving wrong information, costing your company dearly. Another problem related to communication is slow feedback that will slow down company processes.

Over-dependence on the BPO company

When you hire a BPO company for a long period, such a company becomes part of your work process. Sometimes, organizations get used to the services of BPO companies to such an extent that they become dependent on them. Such an occurrence can result in additional costs for the organization and reduced employee productivity.

Other risks

Apart from the clearly stated risks, there are some risks associated with the structure of the organization. Due to the complexity of the structure, small and medium-sized businesses can often face risks related to

• Political instability
• Changes in technology
• Hacker attacks
• Breach of personal data and information
• Quality assurance

BPO Industry Trends

So, what should be expected in the future regarding outsourcing services? In reality, outsourcing services mostly depend on customer requirements, so it is normal for development to take that direction. In addition to customers’ demands, companies must constantly find ways to optimize processes and reduce expenses. Therefore, the most popular trends that are expected to be upgraded are:

• Cloud platforms as a more efficient way to manage the team in the company
• Implementing robotic automation to improve operational efficiency and deliver quality results
• Budget optimization and cost reduction

Conclusion

Business Process Outsourcing (BPO) is an excellent opportunity to optimize processes, save time, and increase the company’s efficiency. Now that you know what is Business Process Outsourcing, it’s time to start the search for the best one out there, tailored to suit the company’s needs.