Business process outsourcing (BPO) is when a company hands over its business operations to an external organization. BPO is a comprehensive outsourcing type that requires close cooperation between the service provider and the client.
In contrast to task outsourcing, which deals with specific projects with set timeframes and budgets, BPO often doesn't have strict time or budget constraints. In BPO, a company doesn't just outsource tasks; it also transfers a whole functional area of its business to the service provider.
The term BPO usually refers to the outsourcing of high-level tasks such as managing finances, human resources, marketing, or legal support for organizations.
Why Is Business Outsourcing Important?
Outsourcing can save money. By delegating tasks like IT, PR, or customer service, businesses can cut costs and boost profits. This flexibility often leads to increased competitiveness.
Outsourcing saves time and promotes growth. It allows businesses to focus on core activities and use resources more efficiently.
It provides access to skilled yet affordable workers, enhancing task quality.
Outsourcing reduces reliance on individual staff members. For outsourcing firms, quality is crucial to stay competitive, which may not always be the case with in-house staff.
It simplifies management. With fewer tasks to oversee, managers can focus on core business areas, cutting costs.
Outsourcing lowers risks, especially with well-defined contracts.
It enables businesses to stay lean, avoiding the need for a large workforce or complex structure. It's also helpful for business reorganization or cost optimization.
In summary, outsourcing is beneficial in about 90% of cases. Its main advantages include:
Higher quality levels.
Significant economic benefits.
The contractor handles tasks, reducing headaches for the client.
Business Process Outsourcing Examples
Business process outsourcing (BPO) is becoming increasingly diverse, with new areas emerging regularly. Commonly outsourced functions include logistics, recruitment, document management, maintenance, customer service, call center operations, programming, accounting, and more.
While the specific processes vary by industry and organization, several BPO examples are widespread across many large companies.
Call Centers and Customer Relationship Management (CRM)
One of the fastest-growing BPO sectors is call centers or CRM process outsourcing. This involves managing incoming calls either automatically or with an operator's help, optimizing call handling, speeding up information retrieval, and ensuring service is always available.
Many Western companies outsource call centers to regions with lower labor costs, like Eastern Europe, known for providing quality service at competitive prices. Services offered by Simply Contact include BPO, omnichannel and multilingual customer support, technical assistance, front- and back-office support, and more.
Document Production
In large companies, creating a high volume of documents is complex and resource-intensive, involving specialized equipment and technology. Outsourcing document production can reduce costs by about 15% while improving quality and efficiency.
Human Resources Management
Outsourcing human resources involves the entire cycle of recruitment activities, such as posting job vacancies and accessing resume databases. This approach allows companies to focus on core activities while ensuring efficient and specialized handling of recruitment processes.
Accounting Services
Outsourcing accounting functions is increasingly popular due to the liability shift for potential accounting errors. Working with an outsourced accounting firm often means contractual liability for any mistakes, offering a more secure option compared to in-house chief accountants.
Logistics
Many companies now outsource specific logistics tasks to specialized firms with the necessary experience and infrastructure. This can include transportation, warehousing, and distribution, allowing businesses to benefit from the outsourcer's expertise and resources.
These examples illustrate how BPO can vary widely but typically aims to enhance efficiency, reduce costs, and allow companies to focus on their core business areas.
Business Process Outsourcing Companies
Many large international companies use business process outsourcing. Here are some examples:
Ford
Henry Ford realized early on that no company could do everything itself. He initially wanted to personally oversee all production stages but found it too costly to manage every aspect of the company's operations. Eventually, he sought help from independent companies to take over some tasks. Now, Ford only makes 30% of its components, while the rest is outsourced.
IKEA
IKEA is another company that benefits from outsourcing. It doesn't really have its own factories; instead, it works with over 2,500 suppliers known for their quality. IKEA also outsources its logistics functions to another company.
Virgin America
This airline outsources various tasks such as airplane repair and maintenance, baggage handling, ticket booking, and catering. These services are not performed by its own staff but by temporary workers from other firms.
Google
Around 70,000 temporary workers are involved in testing Google's self-driving cars, preparing documents, enhancing products, analyzing data, and managing marketing campaigns.
Other Major Companies
Firms like Procter and Gamble, Levi Strauss, Cemex, Microsoft, Norway Post, and Barclays outsource financial services. They work with providers like IBM, HCL, Xerox, Capgemini, Cognizant, Accenture, Genpact, and TCS.
Business Process Outsourcing Cost
The cost of outsourcing business processes varies based on the type of service, location, and the specific needs of the client. Below is a list of average BPO costs for various regions:
United States & Canada:
Large BPO Pricing: $32 - $40/hr
Mid-Size BPO Pricing: $26 - $34/hr
Nearshore (Central America, South America, and the Caribbean):
These figures provide a comprehensive overview of the BPO market pricing across different regions for the previous year.
Conclusion
Outsourcing offers the freedom to select from a diverse range of companies or experts who best fit your needs, allowing you to receive quality services at a set price without incurring additional costs or obligations.
At Simply Contact, our team consists of active, young, and ambitious specialists who are proficient in English. We possess extensive expertise in various sectors including telecommunications, financial services, aviation, e-commerce, and retail, enabling us to manage projects of any complexity.
Ready to take your project to the next level? Get in touch with Simply Contact today and let's discuss how we can support your business needs. Contact us now for a partnership that drives results!
FAQ
What are the three types of BPO?
Business Process Outsourcing (BPO) can be categorized into three main types based on the location of the service provider in relation to the client:
1. Offshore Outsourcing: Outsourcing to a company in a different country, often for cost savings and access to a global talent pool.
2. Nearshore Outsourcing: Outsourcing to a service provider in a neighboring or nearby country, balancing cost savings with closer cultural and geographical ties.
3. Onshore Outsourcing (Domestic Outsourcing): Outsourcing within the same country, offering benefits like shared language, cultural understanding, and time zone alignment, often chosen for tasks requiring high collaboration.
How can BPO save money?
Business Process Outsourcing (BPO) helps companies save money by reducing labor costs and eliminating the need for extensive training and infrastructure investment. BPO providers leverage economies of scale to offer more cost-effective services. This approach allows companies to focus on their core activities, improves efficiency, and reduces risks through specialized expertise. Additionally, BPO offers flexible staffing solutions, adapting quickly to changing business needs without long-term employee commitments.
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