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What is BPO (Business Process Outsourcing)?

Glossary definition

What is BPO (Business Process Outsourcing)?

BPO meaning and context

Business Process Outsourcing, or BPO, refers to the process of contracting standard business functions to be handled by a party outside of the company.

Those in the BPO industry can provide this support thanks to their strong understanding of organizational processes that are similar across most companies.

Most common BPO services and functions:

Companies benefit from business process outsourcing by achieving more flexibility and cost efficiency.

By outsourcing a dedicated task such as payroll to a specialized BPO company, they may make cost savings that can be passed on to clients.

Different types of BPO companies and services

Though business process outsourcing services originated in the manufacturing industry, the practice is now adopted by all types of businesses, including for-profit, non-profits, and government agencies.

Some businesses outsource full business functions to a single provider, while others use BPO to run a specific process, like administration, IT management, or customer support.

What is the difference between BPO and a Call Center?

Call centers are a type of BPO. For example, a manufacturer may outsource their customer service to a call center.

But business process outsourcing isn’t limited to customer service, or to call centers. The same manufacturer might use BPO to outsource payroll, accounting, and similar administrative tasks.

What is BPO in real estate?

In real estate, business process outsourcing is often used for front-office administrative tasks such as property listing, and back-office tasks such as research or accounting.

This allows brokers the freedom to spend their productive time on the work they specialize in, rather than being constrained by other duties.

Consequently, BPO can drive down the costs of asset summary, loan sizing, lease abstraction, and more.

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The wider BPO industry

Companies of all sizes and at all stages of their journey may use BPO.

For example, a startup might not have the budget to hire an entire in-house department, or an established company may want to reduce complexity and improve flexibility.

So, BPO companies have a large pool of potential clients. They may serve a particular industry, specialise in certain functions or processes, or help businesses achieve a range of objectives.

The benefits of business process outsourcing

BPO can reduce your business admin

You can outsource just about any business function, which is a simple way to reduce your business admin

Spend a little time making sure you understand and can convey, in writing, what task(s) you want to outsource. 

For example, if you’re outsourcing bookkeeping needs, you might need to set aside time to get your accounts in order, plus take a little extra time to walk your accountant or bookkeeper through them for ease of understanding.

BPO can make your business more flexible

Another key advantage of BPO is its potential to make your business more flexible.

By outsourcing areas outside of your core competencies, you free up time, costs, and resources to focus on what’s most important.

By working with BPO companies, you may also gain access to cutting-edge technologies that you may not have in-house, helping you continually improve operations and adapt to shifting markets.

Choosing a BPO service company to meet your needs

When choosing a BPO provider, companies need to consider much more than price. The vendor’s ability to help the business achieve its objectives, become more flexible, or enhance innovation should all be factored into the decision.

Other qualities to look out for include:

  • Ability to support the business with both current and future objectives
  • Knowledge of any relevant regulations and data laws
  • Relevant industry experience
  • Uses metrics to report on goal progress and prove they are hitting contract targets.

Combine BPO with the right software to streamline your business

To maximize the efficiency of business processes, many companies combine BPO with enterprise software.

There are potential solutions for every function, and it’s worth considering how they fit into your overall strategy alongside any outsourcing.

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