What is Business Process Outsourcing (BPO)?
Business process outsourcing is a term which refers to a process of hiring other companies to do the set of business activities or a single function related to the company's business.
Definition of Business process outsourcing (BPO)
Business process outsourcing is a term which refers to a process of hiring other companies to do the set of business activities or a single function related to the company's business. It allows companies to save cost and focus on core activities.
When the company taking over responsibility for a function is located abroad a term ''offshoring'' may be used.
Types of business process outsourcing
1. Back-office outsourcing: outsourcing of internal business functions like payroll, HR, etc.
2. Front-office outsourcing: outsourcing of customer related processes like technical support, maintenance etc.
Pros and cons of business process outsourcing
Pros:
1. Focus on core competency
2. Cost reduction
3. Business process efficiency increasement
4. Focused teams solving problems
Cons
1. Third party vendors dependance
2. Lack of complete knowledge of product/service
3. Less focus on quality due to lower cost offerings through outsourcing