Business Process Outsourcing

Highly prevalent these days, Business Process Outsourcing (BPO) means the contracting of a specific business task to a third-party service provider. The objective of Business Process Outsourcing is primarily to save costs on jobs that a company needs but does not depend upon to survive in the marketplace. We can classify Business Process Outsourcing into two categories: back office outsourcing and front office outsourcing.

The former includes internal business functions such as billing or purchasing, while the latter relates to customer-related services such as marketing or technical support. When a company contracts a BPO outside its own country, it is called offshore outsourcing. Today, the most familiar examples of BPO are call centers, software development, human resources, accounting and payroll outsourcing.

Most of the companies involved in outsourcing belong to the United States and Europe, and most of the BPO units are in countries like India, China, Malaysia, the Philippines and even Russia. These Business Process Outsourcing units not only save time, energy, and resources of the outsourcer, they are also cheaper, faster, and highly efficient.

Unlike an application service provider (ASP), the use of BPO usually also means that a certain amount of risk is transferred to the company that is doing the job on behalf of the outsourcing company. Business Process Outsourcing includes the software, the process management, and the people to operate the service.

However, in a typical ASP model, only the provision of access to functionalities and features provided or 'served up' through the use of software are included, normally via web browser to the customer. Being dependent on information technology, BPO is sometimes called Information Technology Enabled Services (ITES). Among the subsets of BPO are Knowledge Process Outsourcing and Legal Process Outsourcing. The international BPO industry is now estimated to be worth 120-150 billion dollars.