| Acronym |
Full-Form |
| BPO |
Business Process Outsourcing |
Business Process Outsourcing or BPO is an organization's contract with a third party or an independent service provider with regard to its workflow obligations and activities. It allows enterprises to outsource their non-core functions by being a very economical process.
Today, outsourcing repetitive or secondary business operations has almost become a ritual. There are hardly any multination corporations that are left unaffected by outsourcing their maintenance. By offering customer care services, technical support, human resources, communications, etc. a considerable significance has been gained by the BPOs.
Different Types of BPO
Domestic outsourcing or Onshore outsourcing
When the products of BPO are outsourced from someone within the same nation, then it is called Onshore outsourcing or Domestic outsourcing.
Nearshore outsourcing
If the outsourced service or manpower is from some neighbouring nations, then it is called Nearshore outsourcing.
Offshore outsourcing
If the outsourced service received from the BPO is coming from an outside company that is situated in another country, except for its neighbours, in that case, it is called Offshore outsourcing.
How does BPO work?
In BPO, specified functions are delegated by a company to a service provider. This provider can be nearshore, local, or offshore company. For instance, if a photography company offers an integrated services delivery capability that enables tailored solutions to be delivered onsite at the client’s location. Then a service provider might settle an agreement with the company and provide these facilities through their end.
Benefits of BPO
- The company can stay focused on the main business
- Cost-efficient and effective.
- The efficiency of the business is also improved consecutively.
- Growth in revenue is seen in most cases.
- Reduced overhead
- External Expertise
Risks of BPO
There are a number of risks of the BPO:
Security: When the IS or Information Systems are involved in outsourcing companies, the companies face privacy or communication risks. When the business taking care of your IS is not from the same country, then it is more difficult to maintain security requirements. There are real threats of potential breaches and vulnerability disclosures.
Underestimating the costs of services: There is often an underestimation of the running costs by the companies that employ BPO vendors, especially in upgrades and contract renegotiation. Other hidden costs include hardware and software upgrades, internal transitions, vendor selection, currency fluctuations, layoffs, and the potential decrease in individual worker productivity.
Overdependence on service providers: If the vendor encounters problems or lapses in its work, the company can incur extraneous costs and decreased productivity.
Communication issues: The activities can be limited by the language barriers if the company hires individual service providers spread across the globe.
These are some other possible risks associated with outsourcing:
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Data breaches
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Quality control
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Operation restoration
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Nonlocal employees
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Maintenance of strategic alignment
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Political instability
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Exposure to hacking and changes in technology.
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Such specialization that niche demand is no longer necessary
