subject: BPO (Business Process Outsourcing) - Advantages and Disadvantages [print this page] BPO (Business Process Outsourcing) - Advantages and Disadvantages
BPO what is business process outsourcing?
What does BPO stand for? And how does this term function?
Business process outsourcing (BPO) is the method of using a third party who sign the contract with multi-years to handle the specific, specialized processes on a company's behalf in foreign countries. This process that is related to IT-related activities can be done more cheaply, quickly, and efficiently.
Back office and front office outsourcing are two primary types of Business Process Outsourcing. Back office processes consists of payroll, billing, logistics and human resources. And front office outsourcing encompasses technical support, customer service, marketing and advertising.
BPO (Business Process Outsourcing) is mainly popular in IT (Information Technology) Outsourcing. This process can be clarified as hiring a third-party company or service in other countries to do IT-related activities. Those activities are usually related to System Development, Data Center Operations, Project Manager, Open Source, Web Development, Application Management, Application Development, and Quality Maintenance (including testing and quality assurance).
BPO is also considered as "no-core" to the primary business strategy.By outsourcing certain niches of business, the employers can focus on their primary purposes.
Besides, BPO is also common for organizations to outsource Financial and administration (F&A) processes, Human Resources (HR) Functions, and other activities relating to Finance and Investment.
This strategy is also well-known for the practice of hiring a company based in another country inITES field (Information Technology-enabled Services).
The Advantages of BPO strategy can be characterized as the following things: Cost Reductions, Concentration on core business, Outside Expertise, Cater to changing customer demands, and Revenue increaseby using this method, the employers can save time and money for training and controlling the third-party company.
The Advantages:
Cost reductions: In this method, the employers can reduce the cost by having process improvements done easily; and with easy control and administration.
Concentration on core business: The employers can have time to focus on their plans when the third-party company take care of the rest.
Outside expertise: The employers don't have to take time to do recruitment and training to personnel. And the qualifications of employees are high due to the serious cooperation.
In conclusion, although BPO may be popular for profitability now, consumer and employee backlash related to government restrictions or taxation can reduce its popularity.
