What is BPO (Business Process Outsourcing): Types, Benefits and Examples

As industries are growing at a faster pace, companies are more often in a position to outsource many activities to some specialized firms. With $245.9 billion worth in 2021, an ideal rise to $329.9 billion in 2022, points to the Global Business Process Outsourcing market valuation. Since then it has grown. The research by GlobalData also predicts that from 2023 to 2026, this segment will grow at a compound annual growth rate of 2.8%. In an effort to appreciate why this market is rapidly growing, it will be helpful to first define What is BPO, its types, benefits, and how it works.

What is Business Process Outsourcing?

The BPO full form is Business Process Outsourcing. It means the act of drawing, partnering, engaging, or outsourcing any third-party firm to manage several procedures. These business processes may include some of the following BPO services; call center and help desk support, data entry, and conversion, through accounting and bookkeeping, recruitment and staffing, etc.

In this way, companies can keep up with their primary responsibilities, minimize expenses, and increase productivity. This is not just the best practice but it is a strategic decision that gives much flexibility. A BPO example can be where a tech-based firm decides to outsource their customer service, and payroll services from a BPO service provider.

What are the Types of BPO Services?

Now let us also discuss its types to have a better understanding of What is BPO. The business process outsourcing service is basically divided into three types, the front office, back-office, and the knowledge process outsourcing.

1. Front-Office BPO

Front-office BPO services are defined as those services that present a direct customer interface or client. A front office example is BPO call center. In this service, one is supposed to coordinate all help desks, offer technical support, and respond to customer questions.

Due to the rising competition, the BPO call centers are adopted by industries in telecommunication, retail, banking and even e-business. They provide telecalling service, email support, chat support and social media support in the front office BPO service.

2. Back-Office BPO

The other type is back office that deals with service delivery that does not come into contact with customers. All these functions are also significant for the operation of firms and companies, albeit there is no need for the firms and companies to converse with the clients directly. The common back office BPO examples include data processing, salaries computation, bookkeeping, recruitment and selection, and technical support.

These back office operations are outsourced in a bid to rationalize a number and certain processes as well as for sake of costs and time. Organizations can sustain productivity when acquiring staffing solutions while not having to spend big amounts of money on staff hiring internally.

3. Knowledge Process Outsourcing (KPO)

KPO is the third type, an offshoot of the services offered in the hierarchical business world. It is connected with higher-level activities that require experience and certain knowledge. Examples of KPO BPO are services such as; legal services, accountancy and analysis, research and development writing, and content creation among others.

The need for knowledge-intensive work with regard to data and analytics has led to the emergence of KPO. The use of outsourcing has seen organizations cut the number of experiential professionals they require for specific tasks.

What are the Benefits of BPO?

Now that you have got the basic understanding of What is BPO, it’s time to understand why its market value is growing at an exponential rate. Business Process Outsourcing helps businesses in multiple ways. Here are some of its key benefits:

1. Cost Savings

Outsourcing companies provide a cheaper solution to businesses than when one contracts independent teams that they need for a particular project. Others include; lower labour costs, operating at a large scale, and lower costs of infrastructure. Companies are able to save on wages, health, insurance, education, and overhead expenses.

2. Focus on Core Operations

When using outsourcing, the various activities that clarify the value of the business can be solved in different ways leaving the business to focus on important aspects that can contribute to its growth such as developing new products, selling them, or catering to customer needs. However, this understanding of core competencies enables companies to grow and change as well.

3. Access to Expertise

A point about BPO companies is that they concentrate on particular business functions which entails that they bring in specialized knowledge. This is particularly helpful in instances where work to be done is diverse, like consulting, accounting, technology, or law. Employers have an opportunity to hire specialists in short demand and at the same time, companies do not have to employ full-time professionals.

4. Scalability

Outsourced services are flexible with the clients. As a result, a business can report increased outsourcing demand due to organizational development or decreased outsourcing demand if the organization needs to reduce its activity. In particular, outsourcing helps to avoid problems connected with fluctuations in demand since outsourcing companies are able to accommodate the changes for their business partners.

5. Improved Efficiency

Business process outsourcing solutions provide new opportunities for establishing effective cooperation between businesses, thus enhancing the efficiency of their operational process. One of the primary benefits of outsourcing BPO services is that it makes it easier to eliminate workflow bottlenecks, increase cycle time, and decrease mistakes that affect productivity across the board.

Business Process Outsourcing (BPO) Examples

Business process outsourcing is one of the most popular strategies being implemented in large organizations today. Here are some examples: 

1. Customer Service

The most common example of BPO services is the outsourcing of customer service. Businesses such as telecommunication, e-business, and retail sales normally use BPO call centers to deal with customer information and concerns. This makes it possible for business organizations to offer round-the-clock service to their customers without employing their own personnel.

2. Data Entry and Processing

Numerous firms today contract out data input and data processing jobs to BPO firms. These tasks may take time and may often be a repetitive process, thereby when they are outsourced they are done accurately and in less time.

3. Human Resources (HR)

A few examples of the BPO include outsourcing of HR functions, recruitment, payroll, and benefits administration services. Outsourcing of BPO services for undertaking management of human resources leads to cost savings for the firms and fulfills the legal requirements of the country.

4. Finance and Accounting

BPO services include the administration of accounts and bookkeeping, sales and purchase, taxation, financial reporting, and other financial-related services in the finance and accounting department. Several outsourcing firms deal in these areas to ensure that firms obtain rightful financial services that are timely and accurate.

Conclusion

So, what is BPO? Business Process Outsourcing is a game-changing strategy that helps businesses streamline operations, reduce costs, and gain access to expert services. From customer service and data processing to finance and HR, BPO services cover a wide range of business functions.

Frequently Asked Question: 

Ques: Is BPO a call center?

Ans: Yes, a Call center is one type of Back office Business Process Outsourcing (BPO) service. 

Ques: Is BPO good for freshers?

Ans: Yes, BPO is a great choice for freshers as it does not require any prior experience or expertise. 

Ques: What is the qualification for BPO?

Ans: The standard qualification for BPO is matriculation. However, anyone can apply for this job. 

Ques: What is BPO full form?

Ans: The full form of BPO is Business Process Outsourcing.