What is BPO (Business Process Outsourcing)

All about Business Process Outsourcing (BPO)
Today, the term Business Process Outsourcing has gained momentum and the trend of outsourcing front and back operations to the centers in Philippines and India together with other countries in Asia has fetched a lot of attention. We often come across the forecasts that display the growth in BPO with more western firms outsourcing to the Asian and other countries.
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In this module, you will get to know about BPO phenomenon in detail. This article gives a clear understanding of the dynamics that are a part of this topic.

What is BPOs and Call Center?

BPO is an acronym for Business Process Outsourcing. This is a practice of contracting a particular work process or the processes to some external service provider. The services may include accounting, payroll, Human resource, IT services, data recording, telemarketing, social media marketing and more. Basically, BPO fills the supplementary business functions with services that could be technical or non-technical.

There is no evidence requiring state that BPO is the fastest growing industry in the global market today. Every year the score of BPO industries across the globe is increasing. And this is something which makes its difficult for a BPO company to portray itself as a key player in the market. But there are a lot of BPO companies that have risen exponentially and have also come up as successful leaders of the industry.

Despite this, BPO is also familiar to us as Information Technology Enabled Services (ITES). Most of the times business processes are information technology based.

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Further to this, KPO (Knowledge Process Outsourcing) and Legal Process Outsourcing (LPO) are the sub-segments of the business process outsourcing industry.

As BPO is growing at a constant speed, it has widened its service area too. There are endless services that can be easily outsourced to the BPO industries.

Key Services of BPO industries:

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Basically, Business Process Outsourcing services can be segmented into back office outsourcing and front office outsourcing. Both the sections include different services to be taken care of.

Back Office Outsourcing Services:

These services include: data entry, quality assurance, data management, data entry, payment processing, and surveys.

Front Office Outsourcing Services:

These services include email, fax, phone conversations and other types of interaction with consumers.

Businesses mainly do Business Processes outsourcing (BPO) front office services in customer support, inbound and outbound sales, appointment scheduling, market analysis and research, and technical support.

With all this, comes the types of BPOS. If we see it from a geographical perspective: there are three types of services: offshore, nearshore and on-shore. Adding on to the geographical types, there is also a difference in the types of services offered by each vendor. The two most common types are

  • Vertical services
  • Horizontal services

Vertical Services:

This is the fastest segment of growth in the area of outsourcing as it stretches the outsourcing/BPO equation by offering another avenue for businesses to roll out new services, products and more. These may be branded as the core functionalities earlier. Vertical outsourcing permits even small to medium-sized businesses to inculcate competencies of their suppliers and outsourcers into their respective model. Manufacturers have taken a very long approach where supply chain may be incorporated and redesigned into the business model.

For instance: Nike has focused a great deal on development and design of the new products and together with this, marketing the core manufacturing process that it outsources. Now a lot of businesses in this service industry have realized the strength of vertical outsourcing too.

Horizontal Services:

These are the services provided by BPO providers to a particular industry niche or vertical. For instance: Financial services and insurance. A BPO outsourced provider may have specialization in offering outsourcing services to the BFSI clients, but may also offer multiple types of outsourcing service support to the consumers. Companies may offer inbound call center support, chat support, email support, forms processing, digitization services, etc., everything geared toward financial services and banking but not to any other industry vertical.

Geographical Types of BPO

As companies across the globe offer BPO services to other organizations, BPO can be segmented into different types on the basis of the service provider’s location.

Offshore Outsourcing

Offshore outsourcing or only offshoring takes place when an organization signs a contract for services offered by a company in the foreign country.

Onshore Outsourcing

Domestic outsourcing or onshore outsourcing takes place when an organization contracts for services offered by a company operating in the same country as a hiring organization.

Nearshore Outsourcing

NEarshore outsourcing is when an organization contracts for the services offered by companies located in the neighbouring countries.

Advantages of BPO

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For beginners, the arrival of foreign exchange and dollars put these countries at a profit as US dollar is the reverse currency or the currency in which the economies stand to fetch the profits in terms of dollar reserves. This puts them on the profit side over those countries that do not have dollar reserves.

Higher Rate of Employment

The employment rate generated by BPO sector absorbs the majority of the workforce in these countries. In simple words, a large number of jobs created by the BPO companies act as a real buffer against the economic ladder.

Actually, many studies state the fact that most of the economically underprivileged segments have earned benefits to a great extent.

Elevating Value Chain

It is clearly visible that value chain of these economies has moved up. In simple words: countries like India and Philipines are into the higher value-adding activities today like research and development and KPO. This means that very soon these economies may compete with the economies in the west in innovation and R&D.

Eventually, BPO has altered the perceptions of Western countries about the Asian countries and have turned them positive about it.

Business Process Outsourcing – The Future

The future of BPO is no different to many industries. There are experts who finger towards RPA as the key avenue through which BPO may experience some change. For instance: Image recognition and data entry work can be automated easily. Nevertheless, the professionals report that some particular functions like telemarketing and handwritten data may resist automation.

Every industry including BPO will change the emerging technologies like cloud services, machine learning and social media in order to reduce costs and accelerate the growth. A very clear example of the productized services is a package bundling the cutting-edge accounting software and accounting services, with both the services billed to the contracting company on monthly basis. Startups are however becoming more popular in such type f service, so there is a need for mutual dependence with BPOs.

The culture of supporting and offering improvements in social media management tools will continue. Investments in cloud computing may also persist as it is becoming a mature platform. Additionally, BPOs will invest in expanding their workforce.

Businesses now expect BPOs to fill all the gaps or even become dependent on them. BPOs need to be more transparent in order to build and maintain trust. There was a time when BPO providers were worried that they may lose their ability to work for the U.S organizations if new administration changed its policies on tax laws, trade, and visas. However, experts do not hold the opinion that changes in the political parties or their policies will affect BPO or KPO negatively. Because. Additionally, experts hold the opinion that individual country politics will be less experienced to disrupt the businesses.

With such a vast expansion in the BPO industry, there are endless companies that have bagged reputation and offer exclusive services.

One of the topmost examples of BPO companies is:

Genpact:

Genpact is a major BPO company in India. It was established in the year 1997. The company made rapid progress in order to establish itself as one of the most trusted names offering BPO services in the country. It has got its branches in more than 25 countries all over the globe. This BPO industry offers its services to more than 100 companies globally.

Among all the major services offered by Genpact, a few are human resource services, banking and financial services, risk management services and aftermarket services.

Difference between a BPO and a Call Center

Business Process Outsourcing (BPO)

A business process outsourcing company is basically responsible for performing a progress or some part of the process of another business organization. Outsourcing basically takes place to save on costs or to gain in productivity.

Call Center

A call center can also be considered a BPO company. However this is not true, because there are BPO organizations handling their business through websites only. And these do not process any telephone calls.

Final Comments

Today, BPO industry is running with a pace which is unstoppable. It includes highly educated and young workforce that conducts the routine for which. In most of the cases it overqualified. As a consequence, the exclusive growth of BPO in India has also offered an elevation to working conditions that are acceptable in Urban India and may also prove to be short of employee aspirations.Order a free consulting Now

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What is BPO. Examples. Types of BPO Companies.
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What is BPO. Examples. Types of BPO Companies.
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Today, the term Business Process Outsourcing has gained momentum and the trend of outsourcing front and back operations to the centers in Philippines and India together with other countries in Asia has fetched a lot of attention. We often come across the forecasts that display the growth in BPO with more western firms outsourcing to the Asian and other countries. Read more...
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SITO: Software & IT Outsourcing
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