BPO or Business Process Outsourcing is when a company hires a third party company to perform functional business processes. In most cases, a BPO company is specialized in one or more functions, such as accounting, call center management, recruitment, human resources and more. Some are even more specialized towards a particular industry, such as mortgage process outsourcing, medical coding or medical recruitment.
When a company hires a resource outside of their country, it is called offshore outsourcing, while if it’s a neighboring country, it is nearshore outsourcing.
Business Process Outsourcing first became known as a manufacturing solution, whereby companies would hire factories to perform manufacturing services in a variety of industries, from automotive, to clothing, to electronics and more. In recent years, those solutions have expanded to solve many different business functions in many industries. Additionally, information technology outsourcing (ITO) has grown, especially in India.
With the advancement in technology, the world has truly become a global economy. The countries which are the biggest players in BPO include India, the Philippines and China. There has also been growth in Eastern Europe and Africa in recent years.
In 2017, the outsourcing industry equaled approximately US$88.9 billion, with ITO earning the majority at US$64.3 billion.
There are many reasons why companies decide to go the BPO route. Some of the reasons include:
1. Streamline repetitive and low skill processes to save money that can be spent on higher level initiatives and talent.
2. Quickly fill a gap where there is a lack of talent, equipment or technology to perform current functions or fulfill new industry requirements.
3. Manage headcount for better financial reporting.
4. Manage budget and overhead during high growth or business lows.
In certain regions, such as Silicon Valley in California, finding technology talent is a constant struggle. While much of the international technological education takes place in top universities in the U.S., many graduates take their education back to their home countries where they hope to improve the lives of their families. Getting work visas in the U.S. has been a continuous struggle for many top graduates and those hoping to immigrate to the U.S. It is also a long, expensive ordeal, and can usually only be done by a sponsoring company willing to foot the legal expenses.
With the talent returning to their countries of origin, the talent gets spread across the globe. A smart BPO company will hire this talent in teams in their countries, and provide these services to U.S. companies.
But it’s not just large corporations which utilize Business Process Outsourcing. Small businesses and start-ups also enjoy the affordability of outsourcing, as well as the flexibility it offers. Consider a small mortgage operation who requires back office support and mortgage processing. Their loan officers can focus on the customer while the mortgage process outsourcing company focuses on the transaction.
If your company is considering BPO for one or many functions, carefully consider the organization before you sign any contracts. Not every BPO is the same, and not all of them will make the ideal partner for you. No savings in the world can make up for a company that fails you or your customers or eats up a lot of your time to manage them.
At StraightSource, we provide you with top quality service for over 45 different business functions. We work with YOU to determine what you need and what solutions will benefit you the most for the best price.