You probably know what outsourcing is: allocating specific processes to an outside provider that specializes in those specific processes. But what is business process outsourcing, otherwise known as BPO? Put simply, it’s another type of outsourcing that relates specifically to business processes. Let’s take a closer look at what it entails and why it may be the right choice for your business.
The history of business process outsourcing
The first companies to utilize this type of outsourcing were large manufacturing firms like Coca Cola. They outsourced the majority of their supply chains, which allow internal personnel to focus on other parts of the business and ensure that these outsourced tasks were handled by experts.
Different types of BPO
There are three main types of BPO: back office, front office and information technology based outsourcing, otherwise known as ITES-BPO. In back office outsourcing a company may turn to a third party for a variety of internal business needs including:
- Human resources
- Financial services
- Accounting
Front office outsourcing generally includes customer-related services like customer service and scheduling. ITES-BPO can include a wide range of services that would otherwise be handled by an internal IT department. There are other less common types of business process outsourcing, including knowledge process outsourcing and legal process outsourcing.
The advantages of BPO
The number of companies turning to third parties to handle these processes is on the rise, and once you understand the advantages you’ll understand why.
BPO increases a company’s flexibility
The vast majority of services offered by BPO companies are offered on a fee-for-service basis, which means companies only pay for the specific services they need – and only when they need them. When a company uses internal staff for these services, that company is forced to stick to a fixed cost basis. No matter how the workload ebbs and flows, their staff expenditures remain relatively the same.
When they make the move to BPO, they pay only for the services they need, which effectively translates these to variable costs. The company is better able to respond to changes in capacities and does not have to invest in additional assets as their workflow changes.
BPO also increases a company’s flexibility by allowing them to focus on their more important core business-building services, without being burdened with the restraints of corporate bureaucracies. A company’s most essential employees no longer have to spend their valuable time working on non-core or administrative tasks, and can instead spend their time more wisely building the company’s core business.
Business processes will get done faster
Outsourcing these business processes can increase the speed at which they’re completed. When a company can count on an entire team to step up to the plate and get these tasks completed quickly, it not only means that particular task is done faster; it can have a domino effect that increases productivity in every other process in the chain. The use of these services allows companies to continue growing while avoiding the bottlenecks that are so common among new and established companies. Instead of sacrificing their speed and agility in order to continue being efficient during expansion, a company can simply turn to a third party.
Outsourcing can move a company forward faster
A company who uses internal departments to handle business processes can easily get constrained by enormous capital expenditures for both people and equipment. While they may pay off in the long run, it can take years to see a return on those investments. When it comes to technology, by the time they amortize they could be outdated.
Companies have a bigger pool to choose from
When a company is located in a large metropolitan area they may have a decent chance of finding staff that is truly the best at what they do, but when a company has specialized needs and is located in a smaller city, this is not the case. The question becomes: why limit the possible applicants to those within commuting radius? Instead, open it up to these companies that take care of the time and expense of finding the best in the business to handle your company’s internal business process needs.
Do you want to outsource?
CrewBloom serves as a connector in the outsourcing industry. We work with innovative companies struggling to find and afford top talents. We fill our talent pool with only top 2% out of 1000 applicants to meet high standards of our clients. Required from your company is a proven, replicable training process, we’ve got the following services covered:
