Business Process Outsourcing (BPO) Strategy
A Business Process Outsourcing (BPO) Strategy is an outsourcing strategy that overlaps with a business process reengineering strategy (uses outsourcing to delegate specific business operations and processes to external service providers).
- Context:
- It can (typically) involve the outsourcing of routine business tasks such as payroll, accounting, customer service, and technical support.
- It can (often) focus on non-core functions that allow a company to concentrate on its primary business activities and strategic initiatives.
- It can (often) include both back-office tasks (e.g., human resources, accounting, and data processing) and front-office tasks (e.g., customer service, marketing, and sales).
- ...
- It can range from simple, transactional processes to more complex, IT-enabled services, often referred to as ITES-BPO (Information Technology Enabled Services).
- ...
- It can leverage cost advantages by outsourcing to regions with lower labor costs, such as India, the Philippines, and Eastern Europe.
- It can involve service providers specializing in a particular function or industry, bringing expertise and efficiency to business operations.
- It can be driven by a need to reduce costs, access specialized expertise, improve service quality, or increase scalability.
- It can be categorized into offshore outsourcing, where the service provider is located in a different country, and nearshore outsourcing, where the provider is in a nearby country.
- It can require high coordination and governance to ensure that the outsourced processes align with the company's goals and maintain quality standards.
- It can involve strategic partnerships between the outsourcing firm and the client to deliver ongoing improvements and innovation.
- It can result in significant cost savings, improved operational efficiency, and enhanced focus on core business functions.
- It can be supported by communication and information technology advances, which facilitate seamless collaboration between the client and service provider.
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- Example(s):
- Customer Service and Support BPO, such as:
- A telecommunications company outsourcing its customer support services to a BPO provider in a different country, ensuring 24/7 service availability at a lower cost.
- A large hotel chain outsourcing its reservation system management and customer service operations to a BPO provider, improving efficiency and allowing the hotel to focus on enhancing customer experiences.
- An e-commerce company outsourcing its call center services to a BPO provider, ensuring multilingual customer support during peak shopping seasons and reducing the need for extensive in-house staffing.
- A multinational technology company outsources its customer support operations to a specialized BPO firm in the Philippines, leveraging the country's English-speaking workforce and lower labor costs.
- A software company outsources its technical support and bug tracking to a nearshore BPO in Mexico, allowing for real-time collaboration due to similar time zones.
- Finance and Accounting BPO, such as:
- A medium-sized accounting firm contracts with an Indian BPO provider to handle routine bookkeeping and data entry tasks, allowing its in-house accountants to focus on higher-value services like financial analysis and advisory.
- A financial institution outsourcing its account reconciliation and data entry functions to a BPO provider, freeing up internal resources to focus on strategic financial management.
- A global bank utilizes a BPO service for its back-office operations, including transaction processing and compliance reporting, to a BPO provider with expertise in financial services regulations.
- Human Resources Management BPO, such as:
- A multinational company outsourcing its payroll processing and human resource management to a BPO provider specializing in these functions, reducing internal administrative burdens.
- A growing startup uses a BPO service for human resources management, including payroll processing and benefits administration, to scale its operations without significantly increasing its internal headcount.
- Supply Chain and Logistics BPO, such as:
- A retail company outsourcing its order fulfillment and inventory management processes to an external logistics firm to streamline its supply chain operations.
- A large e-commerce retailer outsources its order processing and returns management to a BPO company in Eastern Europe, improving efficiency and reducing operational costs.
- Healthcare Services BPO, such as:
- A global healthcare provider outsourcing its medical billing and claims processing to a BPO provider, enabling quicker payment cycles and better compliance with regulations.
- A healthcare provider partners with a specialized medical transcription BPO in India to handle the transcription of patient records and medical reports, ensuring quick turnaround times and accuracy.
- IT and Software Development BPO, such as:
- A technology firm outsourcing its software testing and quality assurance processes to a specialized BPO provider, ensuring high-quality software products while focusing its internal team on product development.
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- Customer Service and Support BPO, such as:
- Counter-Example(s):
- Business Process Automation, which focuses on automating internal processes rather than outsourcing them.
- Knowledge Process Outsourcing (KPO), which deals with more complex, knowledge-intensive tasks like research, analysis, and consulting.
- See: Back Office, Human Resources, Finance, Accounting, Front Office, Contact Centre (Business)
References
2024
- (Wikipedia, 2024) ⇒ https://en.wikipedia.org/wiki/Outsourcing#Business_Process_Outsourcing Retrieved:2024-9-5.
- Business process outsourcing (BPO) is a subset of outsourcing that involves the contracting of the operations and responsibilities of a specific business process to a third-party service provider. Originally, this was associated with manufacturing firms, such as Coca-Cola that outsourced large segments of its supply chain.[1]
BPO is typically categorized into back office and front office outsourcing.[2] BPO can help your business remain competitive and efficient by leveraging the expertise of other companies that are more specialized in certain functions.[3]
BPO can be offshore outsourcing, near-shore outsourcing to a nearby country, or onshore outsourcing to the same country. Information technology-enabled service (ITES-BPO),[4] knowledge process outsourcing (KPO) and legal process outsourcing (LPO), a.k.a. legal outsourcing, are some of the sub-segments of BPO.
Although BPO began as a cost-reducer, changes (specifically the move to more service-based rather than product-based contracts), companies now choose to outsource their back-office increasingly for time flexibility and direct quality control.[5] Business process outsourcing enhances the flexibility of an organization in different ways:
- BPO vendor charges are project-based or fee-for-service, using business models such as remote in-sourcing or similar software development and outsourcing models.[6][7] This can help a company to become more flexible by transforming fixed into variable costs.[8] A variable cost structure helps a company responding to changes in required capacity and does not require a company to invest in assets, thereby making the company more flexible.[9]
< BPO also permits focusing on a company's core competencies.[10]
Supply chain management with effective use of supply chain partners and business process outsourcing can increase the speed of several business processes.[1]
- Business process outsourcing (BPO) is a subset of outsourcing that involves the contracting of the operations and responsibilities of a specific business process to a third-party service provider. Originally, this was associated with manufacturing firms, such as Coca-Cola that outsourced large segments of its supply chain.[1]
2015
- (Wikipedia, 2015) ⇒ http://en.wikipedia.org/wiki/business_process_outsourcing Retrieved:2015-6-25.
- Business process outsourcing (BPO) is a subset of outsourcing that involves the contracting of the operations and responsibilities of a specific business process to a third-party service provider. Originally, this was associated with manufacturing firms, such as Coca Cola that outsourced large segments of its supply chain. [11] BPO is typically categorized into back office outsourcing, which includes internal business functions such as human resources or finance and accounting, and front office outsourcing, which includes customer-related services such as contact centre services. BPO that is contracted outside a company's country is called offshore outsourcing. BPO that is contracted to a company's neighbouring (or nearby) country is called nearshore outsourcing. Often the business processes are information technology-based, and are referred to as ITES-BPO, where ITES stands for Information Technology Enabled Service. Knowledge process outsourcing (KPO) and legal process outsourcing (LPO) are some of the sub-segments of business process outsourcing industry. In 2010, the Philippines surpassed India as the largest business process outsourcing industry in the world.[12] [13] After growing 20 percent in 2012, the BPO industry of the Philippines is estimated to gross revenue of upwards to $25 billion by 2016. By these estimates, the Philippines' BPO industry will account for approximately 10 percent of the nation's GDP.
- ↑ 1.0 1.1 Tas, Jeroen; Sunder, Shyam (May 2004). "Financial services business process outsourcing". Communications of the ACM 47 (5): 50–52. doi:10.1145/986213.986238.
- ↑ "Getting A Piece Of Business Process Outsourcing". Forbes. https://www.forbes.com/sites/greatspeculations/2015/06/22/getting-a-piece-of-business-process-outsourcing/#12b9f2c56f90.
- ↑ "4 Advantages of Business Process Outsourcing (BPO) | Euromos Global" (in en-GB). 2022-09-24. https://euromosglobal.com/4-advantages-of-business-process-outsourcing-bpo/. Retrieved 2022-10-19.
- ↑ J. G. Nellis; David Parker (2006). Principles of Business Economics. Financial Times Prentice Hall. p. 213. ISBN 978-0-273-69306-2. https://books.google.com/books?id=a8RFUZHfz2gC&pg=PA213.
- ↑ Sagoo, Anoop. "How IT is reinvigorating business process outsourcing" CIO. 6 Sep 2012. Retrieved 25 March 2013.
- ↑ BPM Watch. "In-Sourcing Remotely: A Closer Look at an Emerging Outsourcing Trend" "In-sourcing…Remotely: A Closer Look at an Emerging Outsourcing Trend". http://www.bpmwatch.com/columns/in-sourcing-a-closer-look-at-an-emerging-outsourcing-trend.
- ↑ "Boundaries between IT outsourcing and BPO are becoming blurred: Ovum". http://www.cio-asia.com/mgmt/outsourcing/boundaries-between-it-outsourcing-and-bpo-are-becoming-blurred-ovum/.
- ↑ Willcocks, Leslie; Hindle, John; Feeny, David; Lacity, Mary (June 2004). "It and Business Process Outsourcing: The Knowledge Potential". Information Systems Management 21 (3): 7–15. doi:10.1201/1078/44432.21.3.20040601/82471.2.
- ↑ Gilley, K. Matthew; Rasheed, Abdul (August 2000). "Making More by Doing Less: An Analysis of Outsourcing and its Effects on Firm Performance". Journal of Management 26 (4): 763–790. doi:10.1177/014920630002600408.
- ↑ Kakabadse, Andrew; Kakabadse, Nada (April 2002). "Trends in Outsourcing". European Management Journal 20 (2): 189–198. doi:10.1016/S0263-2373(02)00029-4.
- ↑ Tas, J. & Sunder, S. 2004, Financial Services Business Process Outsourcing, Communications of the ACM, Vol 47, No. 5
- ↑ Balana, Cynthia D. and Lawrence de Guzman. (December 5, 2010). It's official: Philippines bests India as No. 1 in BPO. The Philippine Daily Inquirer.
- ↑ http://www.gmanetwork.com/news/story/63053/economy/companies/philippines-still-top-bpo-destination-consulting-firm
2014
- http://www.investopedia.com/terms/b/business-process-outsourcing.asp
- QUOTE: A method of subcontracting various business-related operations to a third party. When business process outsourcing began, it applied chiefly to manufacturing entities, such as soft drink manufacturers. However, it is now applicable to the outsourcing of services.