“Business process outsourcing” or “BPO” is now part and parcel of business terminology and refers to companies and businesses outsourcing or handing over business tasks which do not form part of the primary or core activities of the business, to other organizations specializing in such services. It is a trend followed by most large companies. But with BPO service providers increasingly making their services flexible, small and medium-sized companies are also joining in the trend to outsource.
Types of Outsourced Responsibilities
Tasks typically outsourced include:
- Human resource management
- Customer care services
- Product or service distribution
- Assembly line management
- Data transcription
- Forms processing
- Search engine optimization, and more.
Medical and Legal Transcription
In the medical field, outsourced responsibilities include transcription of medical reports which is generally called medical transcription. Outsourcing is also followed in the legal field. Law firms, legal professionals and courts outsource transcription of their legal files which is referred to as legal transcription.
Front Office and Back Office Outsourcing
BPO services can be classified into front office outsourcing and back office outsourcing. Call centers and other tasks involving interaction with customers form part of front office outsourcing while back office outsourcing generally includes HR management, accounting and other management-related services to ensure streamlined functioning of the business.
Cost-effectiveness of Outsourcing
What makes outsourcing attractive is that it helps save costs and time. BPO companies often have much of their staff working in countries such as India and China where labor is cheaper. This is what they call offshore outsourcing. Most BPO services these days are enabled by information technology and are hence classified as ITES.
Knowledge Process Outsourcing
KPO or knowledge process outsourcing is a major branch of BPO and involves outsourcing tasks that specifically require expertise and factual knowledge. Insurance companies typically carry out knowledge process outsourcing when they hand over the task of evaluating new applications. This evaluation must be carried out based on a set of rules and criteria which the employees of the outsourcing company must be aware of. However, KPO is quite a wide term and can also include research and development, legal e-discovery and other tasks.
Business Transformation Outsourcing
The ultimate extension of the business process outsourcing concept is BTO or business transformation outsourcing that deals with making a business more efficient and streamlined in order to increase productivity and earnings, and reduce operating costs. The “BPO” definition may not have such a shade of meaning, BPO services effectively enable the client organization to perform better.
The Four Major Steps of Outsourcing
From a client’s perspective, any outsourcing arrangement basically involves four steps:
- A strategy for outsourcing:
You need to come up with a plan to decide the way the task should be outsourced, and the responsibilities that need to be outsourced.
- Evaluating service providers and selecting one:
You need to check out all the BPO service providers out there, their reputation, the services they offer, their customer orientation and also gauge their cost-effectiveness on a rough basis before approaching a service provider.
- Developing the contract:
Now you need to decide upon the terms of the deal including the level of influence of the BPO provider, the services it should provide you with, the rates, and other details.
- Managing the outsourcing arrangement:
The outsourcing arrangement must be managed effectively which ultimately determines the success of the relationship with the BPO provider.