What is business process outsourcing (BPO)?

Business Process Outsourcing (BPO) is the process of hiring another company to handle business activities for you. Phil Labor is here to help you save time and money.

BPO is distinct from information technology (IT) outsourcing, which focuses on hiring a third-party company or service provider to do IT-related activities, such as application management and application development, data center operations, or testing and quality assurance.

In the early days, Business Process Outsourcing (BPO) usually consisted of outsourcing processes such as payroll. Then it grew to include employee benefits management. Now it encompasses a number of functions that are considered “non-core” to the primary business strategy.

Now it is common for organizations to outsource financial and administration (F&A) processes, human resources (HR) functions, call center and customer service activities and accounting and payroll.

These outsourcing deals frequently involve multi-year contracts that can run into hundreds of millions of dollars. Often, the people performing the work internally for the client firm are transferred and become employees for the service provider. Dominant outsourcing service providers in the BPO fields include US companies IBM, Accenture, and Hewitt Associates. You could also find European and Asian companies Capgemini, Genpact, TCS, Wipro and Infosys using BPO’s.

Many of these Business Process Outsourcing (BPO) efforts involve offshoring — hiring a company based in another country — to do the work. India is a popular location for BPO activities.

Frequently, Business Process Outsourcing (BPO) is also referred to as ITES — information technology-enabled services. Since most business processes include some form of automation, IT “enables” these services to be performed.

An offshoot of BPO is KPO — knowledge process outsourcing. KPO includes those activities that require greater skill, knowledge, education and expertise to handle. For example, whereas an insurance company might outsource data entry of its claims forms as part of a BPO initiative. It may also choose to use a KPO service provider to evaluate new applications based on a set of criteria; this work would require the efforts of a more knowledgeable set of workers than the data entry would. The current definition of KPO encompasses R&D, product development and legal e-discovery, as well as a number of other business functions.

Also coming into use is the term BTO — business transformation outsourcing. This refers to the idea of having service providers contribute to the effort of transforming a business into a leaner, more dynamic, agile and flexible operation.

Outsourcing with Phil Labor

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