What is Business Process Outsourcing (BPO)?
In today’s connected world, Business Process Outsourcing (BPO) can enable businesses to lower operating costs, operate efficiently and benefit from smart, innovative processes.
What is Business Process Outsourcing (BPO)?
Business Process Outsourcing (BPO) is a business process in which an organization delegate one or more essential business processes to an external third-party service provider. The services include payroll, accounting, telemarketing, data recording, social media marketing, customer support, and more. BPO usually fills supplementary — as opposed to core — business functions with services that could be either technical or non-technical.
Many business organisations, from fledgling startups to Fortune 500 companies, businesses of all sizes opt to outsource business processes as new and innovative services are increasingly available in today’s ever-changing, highly competitive business climate.
BPO can be an alternative to labour migration, allowing the labour force to remain in their home country while contributing their skills abroad.
What are the processes commonly outsourced?
BPO is often divided into two main services: Back office and front office.
Back-office services include internal business processes, such as accounting, information technology (IT) services, human resources (HR), quality assurance and payment processing.
Front-office services pertain to the contracting company’s customers, such as customer relations services, marketing and sales.
In many cases, organisations outsource one or more functions. For example, instead of outsourcing all HR functions, the company will outsource just the payroll processes.
BPO contracts can involve outsourcing an entire functional area, such as the HR department, to a single vendor.
Commonly outsourced processes include the following:
Customer services and call centres
IT management and services
How does BPO work?
Organisations may look to outsource a business process for various reasons based on the type, age and size of the organization, market forces and economic conditions.
Startup companies often need to outsource back-office and front-office functions because they do not have the resources to build the staff and supporting functions to perform them in-house.
An established company may opt to outsource a task it had been performing all along after an analysis determined that a third-party service provider could do the job better and at a lower cost.
Transferring processes to a BPO company requires change management as it impacts employees, workflow practices and business operations.
The outsourcing decision-making process involves the following:
Company management arrives at the decision to outsource a business process or a part of it.
They evaluate the pros and cons to decide if it makes strategic sense to the organization.
Identify the best BPO for the work and shift the work from in-house to the external services provider.
Benefits of BPO?
There are numerous advantages to BPO:
Lower costs for in-house labour
Businesses can focus on core business functions and achieve better results in non-core functions.
BPO can help with growth and business expansion
Enable flexibility to reassign internal resources to more critical functions
Improved speed and efficiency
How to choose a BPO vendor
Organisations should select BPO providers who can support their business objectives, as well as help them be more agile, more flexible, faster, more innovative and, ultimately, more competitive.
Organisations should consider more than just the price of a BPO contract when choosing a provider. They must also consider how well the provider can deliver on those other points, evaluating each provider to determine whether it has the following:
Adequate understanding of the organization's business and industry;
The capacity to meet current requirements, as well as scale to meet future needs.
An understanding and ability to meet compliance and regulatory requirements, as well as data privacy needs;
Reporting metrics to demonstrate it's delivering on contractual standards; and
The geographical locations to meet business needs and/or regulatory requirements.
Should you need expert advice regarding business process outsourcing services in Singapore, contact us now for a non-obligatory consultation.
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