What is the full form of BPO
BPO : Business Process Outsourcing
BPO stands for Business process outsourcing. It is a contract of a company to an outside provider of services or business processes. It is a cost-saving measure that allows companies to outsource non-core tasks.
This may include manufacturing or back-office functions such as accounting, data entry and human resources. It also includes front-end services like customer care and technical support. Thus, BPO services can be divided into back office outsourcing and front office outsourcing.
There are three types of BPO options which are given below:
- Onshore outsourcing: It is also known as domestic outsourcing. It refers to obtaining BPO services from someone within the same country.
- Nearshore outsourcing: It refers to obtaining BPO services from someone in the neighboring countries.
- Offshore outsourcing: It refers to obtaining BPO services from an external organization in another country except for the neighboring countries.
Need of outsourcing
The major and the most important reason for which outsourcing is implemented is a significant and massive cost reduction. It reduces the cost of the tasks that a company requires.
Let's see a list of BPO benefits:
- Focus on core business
- Reduced overhead
- Outside expertise
- Efficient and cost reducing
- Increase company flexibility
- Increase in revenue etc.
Difference between BPO and Call Center
BPO is an organization which is responsible for performing a process of another business organization. It is used to save costs or gain productivity. On the other hand, a Call center is a part of the client's business. It involves handling telephone calls. It is used to solve customers' complaints and requests over telephone calls.
Note: A call center can be considered a BPO, but BPO is not a call center.
What advantages does BPO offer?
Deloitte discovered that businesses want the following advantages from outsourcing in its 2021 report:
- 88% of respondents mentioned process standardisation and efficiency;
- Cost savings were mentioned by 84 %.
- 73% mentioned increasing business value
- 61% mentioned the acceleration of the digital agenda
- 59% of respondents mentioned capacity development and
- 36% mentioned corporate strategies and plans.
The following are advantages of BPO that proponents frequently list:
- Financial advantages: BPO providers can frequently complete a corporate function for less money or help the organisation save cash in other ways, including tax deductions.
- Improved adaptability: BPO agreements may give businesses the freedom to alter how an outsourced business process is carried out, enabling them to react quickly to changing market conditions.
- Greater advantage in the marketplace: An organisation can concentrate more of its resources thanks to BPO on activities that set it apart from competitors.
- Higher calibre and better performance: Because business processes are their main emphasis, BPO providers are in a good position to do the work with increased correctness, efficiency, and speed.
- Access to new business processes: BPO providers are more likely to be informed of changes in the process domains in which they are knowledgeable. As a result, they are more inclined to make investments in cutting-edge technologies, like automation, that can increase the efficiency, affordability, and calibre of the work.
- Increased coverage Contracting with a BPO company with round-the-clock capabilities and several geographic locations can frequently help organisations that want 24/7 call centre operations swiftly acquire such capability.
What concerns do BPOs pose?
A few BPO risks are as follows:
- Breach of security: Because businesses routinely share regulated and sensitive data with their service providers, a new entrance point for criminals is provided by the technology link between the hiring company and the BPO provider.
- Regulations that must be followed: The regulatory requirements of an organisation apply to its outsourced work as well, therefore it must make sure that the vendors it hires comply with the laws the business must abide by and the regulations that apply to its outsourced work.
- Higher or unexpected costs: The amount of work that has to be done can sometimes be underestimated by organisations, which can result in higher expenditures than expected.
- Relationship difficulties: Organizations may experience communication issues with their contracted service providers or discover that there are cultural differences.
- Excessive reliance on outside providers: When a company outsources a task or service, it is bound to the partner that completes the work. To make sure that important goals are achieved at the agreed-upon cost, the business must manage that connection. If not, it could be challenging for the company to relocate the contract to another outsourced supplier or even bring the operation back in-house.
- Greater likelihood of disturbance: A business needs to keep an eye out for problems that could sever or otherwise disrupt its relationship with an outsourced supplier. These include issues with the outsourced provider's finances or employees, unrest in the world's politics, natural calamities, or adjustments in the economy.