What is Business Process Outsourcing (BPO)?

People discussing what is BPO

People usually equate a Business Process Outsourcing (BPO) company to a call center. Although they are relative in a sense, BPO companies and call centers are not the same. Even using the two terms interchangeably would be erroneous. What remains a fact, though, is that a call center is just one of the few services BPO companies provide their clients. So, what is BPO? Let’s get you started with the definitions. 

What is BPO? 

Business Process Outsourcing, known as BPO, is a practice that involves assigning regular business tasks and activities to a third-party service provider. A BPO company offers specialized services to perform the business activities of another organization. Many professionals in the BPO industry can provide this help because they have a better understanding of the common processes that many companies use. 

How Does BPO Work? 

In simple terms, organizations engage in BPO if they choose to hire a BPO company to do specific business processes and functions for them. Then, the BPO company must have the expertise for certain job functions that organizations wish to outsource. 

A BPO company serves as an extension of the client organization, offering a wide range of services (not just call center services) across various business functions. They deliver outsourcing solutions to Human Resources, Accounting, Customer/Call Center Relations, Tech Support, Software Development, Trading and Marketing, Real Estate, E-Commerce, Project Management, and Back Office, to name a few. 

Why Choose BPO? 

Commonly, organizations engage in BPO to be relieved of non-critical or labor-intensive tasks so they can focus on strategic and core business functions. Although clients generally outsource non-core functions, they also delegate some critical tasks to their chosen BPO partner. 

The BPO company offers its business specializations and provides the client organization with highly-trained teams to do the tasks for them. These teams consist of excellent troubleshooters, innovative thinkers, and overall reliable people to attend to their particular needs. 

Types of BPO 

Based on a geographical perspective, BPO is categorized into offshore, nearshore, and onshore. 

  • Offshore Outsourcing – when an organization outsources from a foreign country 
  • Nearshore Outsourcing – when an organization outsources in a neighboring country 
  • Onshore Outsourcing (or Domestic Outsourcing) – when an organization outsources within the same country 

Key Services of BPO 

Most organizations engage in business process outsourcing for back office and front office business functions. Based on these, BPO companies can narrow down the client organization’s specific needs to tailor-fit their services.

Back Office Outsourcing  

The strategy of subcontracting internal business functions to a BPO provider. For example, such functions may include finance and accounting, IT services, human resources management, quality assurance, payment processing, and more. 

Unlike before, back-office outsourcing would only refer to administrative functions. Today, BPO companies also offer other services related to research, content writing, e-commerce, data management, or digital marketing. 

Front Office Outsourcing 

On the other hand, this service focuses on functions that directly interact with customers. Such customer-facing roles include customer service, help desk, technical support, and sales. 

Like back office outsourcing, front office BPO now extends its services to functions like market research, social media management, virtual assistance, digital customer support, or customer relationships. 

Since the BPO industry is booming, it has been further divided into three specializations

  • Legal Process Outsourcing (LPO) involves support services from an external law firm to perform legal work. LPO includes legal research and documentation, transcription service, or appointment service. 
  • Research Process Outsourcing (RPO) pertains to services related to research and development. RPO offers a range of research tasks from market analysis and financial research to report writing.  
  • Knowledge Process Outsourcing (KPO) refers to knowledge-based or information-related functions. KPO usually requires the outsourcing company’s skills and expertise in a particular field like insurance, healthcare, finance, engineering, and others. 
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Outsourcing Services and Solutions 

Every outsourcing company offers various services and solutions depending on its specialization. Commonly, these are what a client organization may expect from a BPO company: 

Inbound Customer Support 

Excellent customer service is one of the specializations of any business process outsourcing company— if not a common goal. It just differs whether the customer service is inbound or outbound. First, let’s talk about inbound customer support. 

Traditionally, inbound customer support is all about handling customer concerns or issues once there is an incoming call to the company. In short, a company representative takes the call of the customer. Common inbound customer support functions are help desks, inbound sales, direct sales, or account activation. 

Outbound Customer Support 

In contrast, outbound customer support makes the call to the customer. A representative’s goal in this scenario is to reach and attract an existing customer for business reasons. Through an outgoing call, a representative may survey for feedback, upsell, inform the latest promotions, or simply form a good relationship with the customer. 

Usually, business process outsourcing companies with outbound customer support offer services like market research, outbound sales, and telemarketing.  

Non-Voice Solutions 

This type of outsourcing service is the complete opposite of voice-based customer support like inbound and outbound calls. In non-voice solutions, a representative does not carry out phone call tasks. Instead, a non-voice solution representative assists a customer through written communications. 

In today’s setting, non-voice solutions can be performed through social media dialogs, e-mail, and chat support. 

E-mail and Chat Support 

The most common types of non-voice solutions are e-mail and chat support. As customers in this new age prefer interacting with a business representative through online channels, BPO companies have no choice but to keep up. 

Aside from these being the customer’s preferences, e-mail and chat support provide an easy way to interact with consumers and businesses. The swift interactions through these channels allow the quick resolution of customer concerns. 

Technical Support  

Since the rapid increase of technological advancements and the birth of several digital devices, technical support has become an essential service for individuals and businesses. 

This type of business process outsourcing service focuses on helping a customer use a product effectively. Technical experts will do the job of resolving any simple or complex technical issues that a customer is experiencing. Whether it be computer hardware issues, system errors, network problems, or even installing equipment, people can rely on the assistance of technical support for a good user experience

Software Development 

Apart from technical support, one of the BPO services that may continue to create demand is software development. However, creating a team of computer science experts can be a costly and rigorous process of skill-matching, goal-setting, and training.  

With outsourcing software development, BPO companies can provide a readily available dynamic team to help companies create, design, or develop software. What’s more? These software developers are already trained and updated with the skills needed for any business’s requirements. 

Back Office and Process Solutions 

As the backbone of a business, the back office keeps operational activities running in an organization. In a nutshell, this significant part of a company specializes in its internal administrative tasks and support processes.  

Due to the need for streamlining business processes, BPO companies have been offering back office and process support services to companies. Daily non-core operational functions like record maintenance, data entry and management, transaction processing, distribution, and other auxiliary processes will instead be managed by the chosen outsourcing company

Lead Generation  

A business’s growth is always accompanied by having the right knowledge of the target market. While lead generation may only be recognized as a process of seeking qualified leads, it clearly goes beyond that. 

Companies always go for expanding customer reach and attaining leads. To achieve these, effectuating the right strategies to interact with potential and existing customers is important. Thus, an outsourcing company can deliver quality results in market research, surveys, lead nurturing, and lead management. In turn, companies will acquire leads with the potential to convert. 

Appointment Setting 

Appointment setters can be considered the customer’s first point of contact. They handle customer relationship management by somehow being a middleman— doing the appointment setting with a customer for the client. In turn, that meeting may turn into a sale or a good deal, mutually benefiting both parties. 

Companies partner with BPO companies because they have a team of excellent communicators who can successfully engage with clients. With outsourcing, companies can be relieved of such tasks and instead delegate appointment setting to trained representatives. 

Online Proctoring 

Some BPO companies also offer online proctoring to cater to institutions and organizations in need of the service. In outsourcing online proctoring, organizations can be sure of non-fraudulent acts during any exam session. 

This approach in exam proctoring can give convenience to organizations, as well as the test-takers, during remote exams as proctor representatives are, and can be, trained on protocols to provide an efficient and safe remote exam. 

E-Commerce Customer Services 

Due to the demand and rise of e-commerce, companies are looking to expand their business while keeping in check customer concerns. While an e-commerce company centers its energy on strategizing core competencies, its BPO partner can take care of their customers. 

By outsourcing e-commerce customer services, companies can benefit from a BPO company’s updated customer service facilities and efficient customer support. Thus, customer interactions will be at ease through these services: voice-based or non-voice customer service, upselling and cross-selling, account management, customer retention, collections, and disputes. 

Merchant Services 

If e-commerce continues to be in demand, so do merchant services. Organizations with efficient business transactions and processes today can be more productive so as to complement consumers’ lifestyles.   

Business process outsourcing companies usually provide support to companies by assisting with merchant services like credit card or other payment processing platforms. Client organizations can find satisfaction in outsourcing merchant services because they can reduce processing fees, ensure optimized operations, and mitigate merchant risks. 

Benefits of Outsourcing 

The services sector has many components that can provide resources and solutions to many organizations. It continues to grow globally, even faster than other industries— proof that its much-needed services are in demand. So, why outsource? Here are five advantages: 

1. Reduced Costs 

Outsourcing some operational tasks to a BPO company is one way to lower a business’s overhead costs. With BPO, organizations can save expenses by limiting the need for in-house employees and other factors that come with hiring many people. 

If an organization chooses to outsource, it would mean no additional expenses for employees’ sourcing and training. There will also be no need to create a workplace for them since they will be working remotely or offsite. Even the costs for equipment upgrades or maintenance may be included depending on the agreement between the client and the outsourcing company.  

Overall, outsourcing will help an organization reduce its business expenses because of cheaper labor costs. Having to outsource in a country where employee salaries are much more affordable, organizations can be guaranteed significant savings while maintaining the quality of work and results. 

2. Quality Performance and Innovation 

BPO companies can handle specific tasks for clients due to their expertise in any business process. What BPO companies have that their client organizations fall short of are rosters of people with specialized skills needed for business functions. 

An organization can be assured of quality performance as outsourcing companies tend to have highly-trained teams to work for them. They boast of having more resources, top-of-the-line equipment, advanced technologies, and improved infrastructures. With outsourcing services, organizations will be able to adapt to market changes and dynamic business conditions. 

Lastly, organizations can take advantage of operating outside business hours as most BPO companies provide 24/7 service. Quality performance and innovation, along with maximum service hours, are great deals for organizations looking to outsource. 

3. Better Process for Non-Core Functions

BPO companies can give value to an organization because they are exceptional at what they do— they are best at delivering support to their clients. 

As outsourcing companies center their capabilities on streamlining non-core business functions, organizations can be certain of efficient performances of their critical but non-core activities. 

Instead of keeping labor-intensive business processes in-house, getting the best services from BPO companies can result in the vast improvements of such functions. Business process outsourcing companies have the ability to optimize an organization’s business processes and get them functioning at their best.   

4. Increased Focus on Key Competencies 

Outsourcing enables organizations to concentrate on their core plans, skills, products, and services. By doing so, these companies can allocate more of their time and effort to developing their competitive advantage by focusing on their mission-critical business activities. 

Investing in business process outsourcing allows business leaders to direct their attention to what matters and the crucial factors affecting revenue and customers. Doing what organizations are supposed to do and are good at, will help enhance customer satisfaction and eventually boost profits. 

As a result, they can get a significant edge over their competitors that will have a long-term impact in the future in terms of business performance and market trust. 

5. Opportunities for Global Reach 

Not only does outsourcing business processes assist a company in efficiency, but engaging with BPO companies allows an organization to explore global expansion. 

Aside from the ease of supporting different time zones, having a local presence in some countries is useful in reaching customers worldwide. Organizations can then gain access to new markets while also acquiring local market knowledge, which is essential for organizations looking to grow on the international scene. 

Finally, an organization’s local presence is an advantage in seeking local partners and, thereafter, bolsters the quicker expansion of the business. 

The Future of BPO 

The business process outsourcing market worldwide is projected to grow by $525.2 billion by 2030. Even in uncertain times, the fast-growing industry continues to thrive and is not seen to be slowing down at any moment. This shows that companies find a lot of value in outsourcing tasks to specialized BPO service providers.  

Meanwhile, the growth of BPO is powered by new technologies like automation and artificial intelligence (AI), which boosts productivity and efficiency of work — not to mention reduces cost for businesses too. Our evolving technologies have also helped companies and employees to have the option of working remotely or in hybrid setups, resulting in an advantage for businesses to hire professionals from all over the world.  

Moreover, the continuous growth of BPO in the coming years makes the future of the industry bright and is here to stay, helping clients and companies. 

Frequently Asked Questions (FAQs) about Business Process Outsourcing (BPO) 

Q1: Is BPO suitable for all types of businesses? 

BPO is versatile and can benefit various business sizes and industries. Small startups, mid-sized companies, and large corporations can all leverage BPO to streamline operations. 

Q2: How can I choose the right BPO provider? 

Selecting the right BPO partner involves evaluating their expertise, reputation, industry experience, and ability to align with your business goals. 

Q3: Can BPO be implemented for short-term projects? 

Absolutely. BPO’s scalability allows you to engage services for short-term projects, helping you manage peak workloads efficiently. 

Q4: What measures should I take to ensure data security? 

Choose a BPO provider with robust security protocols and establish comprehensive data protection agreements to safeguard sensitive information. 

Q5: Are there regulations governing BPO practices? 

Yes, depending on your industry and location, there might be regulations that dictate how certain functions can be outsourced. It’s important to be aware of and compliant with these regulations. 

Q6: How can I maintain a strong client-vendor relationship? 

Regular communication, setting clear expectations, and continuous monitoring are key to nurturing a strong and collaborative partnership. 

A great business strategy is outsourcing services from knowledgeable and trusted BPO companies. Choose an external service provider that gives a reliable and excellent performance to help your business grow and be successful. 

Cloud Development is your gateway to elevated productivity, cost-efficient solutions, and specialized expertise. Whether you’re aiming to streamline operations or harness skilled capabilities, our team is ready to address your needs. You may reach out to us for a free consultation and let us be part of your success! 

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