Business Process Outsourcing

Business process outsourcing is on a rising trend. From fortune 500 companies to small businesses and startups, BPO has become very popular over the last two decades. We estimate that BPOs will grow at a CAGR (Compound Annual Growth Rate) of 8.5 between 2020-2028. Business organizations are focusing on improving their business agility to survive the constantly changing dynamics. They also seek to improve efficiency and reduce the costs of operations. By outsourcing other operations within a business, organizations can concentrate on their core competencies. Business process outsourcing markets will benefit from such activities. Through business process outsourcing, companies can generate more revenues. In this post, we will concentrate on various aspects of business process outsourcing. But before diving deep, let us understand what a BPO is.

What does business process outsourcing mean?

BPO refers to outsourcing in which a company contracts an external entity to provide various services within a business. The third-party entity is called the subcontracted company. The subcontracted company performs the delegated duties by the contracting company. Therefore, the enterprise can concentrate on the core activities within the business. For example, if your work space is cluttered and you need to get rid of unnecessary documents, you can outsource secure paper shredding services to dispose of sensitive, confidential, or proprietary information. This is the perfect solution if you don’t have time to handle the document destruction process on your own. Hiring a document shredding company will allow you to save time and effort, while providing a clean and organized work space. 

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Why use a BPO company?

BPOs can transform a business into a competitive entity that has more command in its area of operation. Below are some reasons for hiring a BPO company.

Saving costs

Many BPO companies specialize in specific fields like IT, Marketing, among other operations. Thus, BPO service companies can offer the services at a lower cost because they enjoy the economies of scale. They mainly operate from low-cost countries while offering low-cost solutions. It makes client businesses save on taxes. They eliminate the cost of hiring and interviewing. Hence, a business can save on the costs of production and operation.

Focusing on the core business competencies

When a company outsources some of its business activities, it can focus its resources and time on core strategies. It makes the in-house teams adapt quickly to market dynamics that constantly change. Therefore, such a business can become more competitive. Through business process outsourcing, an enterprise can streamline its functions to enhance efficiency.

Increased productivity

BPO companies provide specialized services to contracting companies. Thus, contacting companies can increase their productivity. They can become competitive in the market by producing high-quality products. BPO companies have specialized equipment that can increase production output. The workers can concentrate on their respective departments and activities, which may also increase production.

To gain the global presence

BPO companies help a business gain presence globally. They offer their services in several languages and different regions and countries. Such features can help a business widen its scope of service and improve the customer experience. A business can spread its wings to different regions, which can boost its profits.

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Access to a larger talent pool

Through outsourcing, a business gets a better and larger talent pool. BPO companies use digital hiring processes that enable them to offer their clients a larger pool of talent. With such a pool, productivity in a business increases, and eventually, the profits.

Having seen the benefits of outsourcing, let us now concentrate on BPO services.

Types of BPO services

We can classify business process outsourcing services based on; customer interaction, area of operation, and the services offered. Below are the classifications based on various criteria;

Classification based on customer interactions

1. Back office BPO services

These are services that relate to the internal company functions. They include administrative functions like quality assurance, order processing, and payment processing.

2. Front Office BPO services

Front office services are processes in which the BPO stave has to interact directly with consumers and clients. Such services include customer support, marketing, and order delivery.

Classification based on Vendor location

1. Onshore outsourcing

Onshore outsourcing refers to vendors who are in the same country as the contracting company. However, the two may be in different states or cities. The contracting company may be located in Denver, Colorado, while the BPO is in Jacksonville, Florida.

2. Offshore outsourcing

These are BPO providers located in a country away from that the subcontracting company’s country. For instance, if the contracting company is in the US, the BPO company is in the Philippines.

3. Nearshore outsourcing

A nearshore BPO company is a subcontracted BPO company located in a country near that of a subcontracting company. For instance, a Canadian-based Company can hire a US-based BPO company.


Choosing a BPO company

There are several things that a company has to consider before choosing a BPO company.

What is the primary goal of outsourcing? Is it to reduce the costs of hiring and interviewing?

Do you aim at producing the goods or services at a lower cost? Understanding why you need a BPO company is crucial in determining the business goals and strategies.

Which type of outsourcing fits you best? Some instances need offshore outsourcing, while others are better served by back-office outsourcing. These are some factors that you have to consider before settling on a BPO service provider.

You want a business outsourcing company that can support your business functions. You have to find an adaptable, agile, faster, and flexible BPO service company. If a provider cannot meet these goals, then do not hire them. You should consider more than price when choosing the BPO. Ensure that the BPO company can;

  1. Understand your industry and business adequately
  2. Meet the compliance and regulatory requirements like data privacy and Information technology
  3. It meets your current needs and can scale to accommodate future needs.
  4. Offers reporting metrics that show how they deliver the contractual standards
  5. Work within your geographic locality to meet regulatory compliance and your business requirements.

IF a BPO cannot assure you of the above, then you should not hire them. These are the bare minimums that the BPO should offer.


BPO companies have become increasingly popular. Working with them can help a business scale and grow to new heights. They also help your products to become more competitive because of their high quality at low cost. However, before choosing a BPO company, consider its effects on your business, now and in the future.

Originally posted 2021-12-22 16:54:40.