Business process outsourcing or BPO is contracting the performance of specific non-core but essential business functions to an external service provider. Process like customer service, payroll processing, accounting, inventory management, clerical duties are transferred or relegated by the company to the vendor, who then takes full responsibility for these processes and performs them according to certain standards of quality.
What drives this US$154-billion industry to grow at an estimated rate of 10.9% yearly? The global BPO market has been constantly expanding, not just in terms of revenue, but also in terms of services being added to the list of processes that may be outsourced. More and more countries are also opening up their shores and manpower to the BPO industry.
Most people think that the biggest consideration in BPO is the cost savings. By saving on the amount one spends on salary and benefits for an in-house employee, most companies can pass these savings to customers in terms of lower prices for their goods and services, or use it for other expenditures.
Cost savings, however, is not the most important benefit. What most companies gain is the flexibility that business process outsourcing service providers can give them. For one, most BPO vendors charge on a fee-for-service basis. This creates a situation where the company can think in terms of variable costs, instead of fixed costs. You only pay for the level of service you need, when you need it.
Most businesses also find that they can grow faster with BPOs. For example, a company who wishes to add a call center for their customer service efforts would only have to contract a company who provides such a service. The company would be free from worrying about capital expenditures for equipment, furniture and personnel. What’s more the company will not be burdened by sourcing, hiring, and training new employees to man their call centers. So in effect, the company gains a call center filled with expert agents almost instantaneously and at a fraction of the cost of setting up their own.
A business process outsourcing vendor can also help you focus on your core business. With administrative and non-core processes out of the way, your managers can focus their energies on training your people, closing important business deals, research and development and other areas that directly affect the bottom line.
Common business sense, however, dictates that a company should choose their BPO provider well. You just cannot trust just anybody with your business and your company. Always ask around for recommendations and go with someone you can trust. Further, choose a company with a proven track record on giving their clients the best service at the lowest fees!