Business Process Outsourcing (commonly referred to as BPO) can be the solution that a small to medium sized company has been looking for to grow. At the same time, it is a solution that has been used by larger corporations to cut down on business costs. This type of business outsourcing is also known as ITES (Information Technology Enabled Services), although the term has rarely been used in the past years.
BPO can be defined as contracting a non-primary activity and/or function in your business to a third party business provider. The business process outsourcing service can include accounting, call center relations, customer relations, human resources, payrolls and a lot more. In theory, the larger a company, the more options available for business process outsourcing.
There are two main categories of BPO that we can consider:
- Front office services
- Back office services
Business Process Outsourcing Advantages
For starters, business process efficiency and speed will be enhanced. Then, the employees of a firm can easily invest a lot more time in the core strategies that bolster a competitive advantage while also enhancing chain engagement.
When using BPO, we have asset expenditures and capital resources that are not actually required. This leads to an organizational growth that manages to avert various problematic investment returns. It is one of the main advantages you have to consider. The company does not need to invest in business strategy assets that are not primary. This would facilitate focus shifts towards specific competencies that simply bring in a higher profit.
Business Process Outsourcing Disadvantages
For starters, we can easily be faced with data privacy breaches. That can be serious so you have to be particularly careful about what information you share with the third party provider. Running costs can end up being underestimated. At the same time, you have to be careful and make sure that you do not stay too dependent on the service provider.
On the whole, it is really important that you consider business process outsourcing as a way to grow your company but you have to think about the disadvantages since they can ruin your expansion wishes. Control is always necessary and all processes that a company has need to be controlled.