Business Process Outsourcing: A Comprehensive Guide To The Process And Its Cavetas

A business is like a multi-headed hydra. Each head is essential and plays a key role. Therefore, imagine how difficult it is for the person trying to tame it. In reality, running a business is like taming a hydra. You need to juggle between diverse roles, and this can be a difficult task.

Therefore, there is no shame in getting help. This is where business process outsourcing comes into play. Business process outsourcing, or BPO, is the process of taking external help with specific business processes.

If the term is new to you, then do not worry. We are here to help you guys understand the term closely and some other things related to it. Here we go!

Understanding Business Process Outsourcing

Are you thinking of taking the help of a business process outsourcing firm or a BPO to meet all your business requirements? Well, you should get the basics and the fundamentals right. Create a good base with usable information about the process.

So, what is business process outsourcing? A business process outsourcing firm or a partner is a company that offers expertise and specific services to other companies. These services are usually related to business processes.

This is a very rapidly growing industry as per a study shared by Grand View Research. The BPO industry was valued at around $261.9 billion. In fact, the study predicts that this figure could quickly grow upto $525.5 billion around 2030.

Therefore, it is speculated that the industry is bound to grow at a steady rate of 9.1% by 2030. Hence, more companies would gravitate towards this sector. In fact, if you want to break into this industry, then this is the time.

What Is BPO Used For?

BPO is basically an official outsourcing process that is meant to help small, medium, and large-scale businesses streamline their business process. This can be done in a myriad of ways.

Hence, a BPO is often used to work in the back office and front office roles. Therefore, here is a brief rundown of how BPOs work and what they are generally used for:

• Back office: Back office business process outsourcing includes functions like human resources, data entry, and accounting. Outsourcing these processes can help businesses streamline costs and improve time management.
• Front office: Front office functions generally include processes like customer care, technical support, and other customer management aspects. Outsourcing this process can stream customer engagement and even enhance it.

Types Of BPO (Location Wise)

BPOs come in different shapes and sizes. However, before we finally look at the subsets, we need to look at the different variations of BPO as per location. This is important as location changes the way a BPO functions. Here are variations of BPO as per location:

• Onshore: Onshore business process outsourcing services are known as domestic BPOs. These work in the same country or jurisdiction of your company and that makes them easy-acess.
• Nearshore: Nearshore BPOs refer to companies that are located just adjacent to your country or jurisdiction. This is comparatively accessible. However, it does come with its challenges.
• Offshore: These companies are located absolutely outside the country you are operating in. These can help businesses streamline everything, but only via remote support. Therefore, you will not be able to contact them physically.

Variations Of BPO:

BPOs come in several subsets and variations. These subsets and variations set each one apart from the other. Hence, understanding these variations is crucial for understanding the expertise that they provide.

In the following subsection, we will be listing some of the prominent variations of BPOs that are out there. Each of these subsets provides specialized expertise to their client. Hence, get through these sections and subsections to understand the overall aspect better.

Here we go!

Knowledge Process Outsourcing (KPO)

Knowledge Process Outsourcing, or KPOs, allows businesses to brainstorm part of the deal. In other words, helping companies to strategize, chalking up plans, etc. Therefore, these firms help businesses with all kinds of administrative work.

Like for example, some businesses hire KPOs to look at finances and identify discrepancies. Or they hire these firms to plan a merger and acquisition. Therefore, these are better suited for businesses that are growing or are currently in that phase of growth.

Human Resources Process Outsourcing (HRPO)

HR business process outsourcing, or HRPO, focuses more on HR-related work. These include roles like payroll, onboarding, exiting, employee management, etc. They take the burden of managing employees and make business operations more streamlined.

HRBPOs are great for businesses with limited resources and cannot afford a specialized HR department. They will take care of all the necessary HR functionalities and make the process more streamlined.

Legal Process Outsourcing (LPO)

Legal process outsourcing, or LPOs, specializes in outsourcing legal processes. LPOs offer services that include documentation review, legal research, and other legal activities. Therefore, it can be key for the effective functioning of the business.

LPOs come in several different formats. However, the most common is the one that deals with public cases and regulatory cases. In some cases, the company might even hire lawyers specialized in lawsuits or similar situations. 

Financial Process Outsourcing (FPO)

Financial process Outsourcing is a part of the KPO side of things. An FPO would look after all the financial needs and wants of your company. An FPO will look at the documentation, analytics, reports, accounting and every other task that is related to finance.

One subset of an FPO is called insurance business process outsourcing. This subset only deals with the insurance side of things. Hence, taking care of all the insurance-based needs of a business.

IT Process Outsourcing (ITPO)

As the name suggests, an IT Process Outsourcing company is all about IT solutions. In general, ITPOs work on polishing the IT services of a company or perfecting the product. Hence, making it an essential aspect of a business of the current time.

ITPOs also look at the polishing side of the services. However, some companies only give redundant jobs to ITPO employees due to confidentiality. Therefore, always remember that next time you plan on getting yourself an ITPO team.

Pros Of BPO

Business process operations are one of the easiest ways to replace redundant workload with something that is relevant and actually benefits the business. Hence, more and more companies have actively adopted this module of work.

If you are actually wondering why BPOs are so popular, here are some of the most prominent and useful reasons why BPOs have become so popular in recent years. Here we go!

Saving Operational cost

One of the biggest pros of taking the help of BPOs is saving money. As per surveys conducted by Deloitte in 2020, BPOs have actually helped businesses cut down 70% of costs in several departments.

This is a huge figure and shows why businesses choose to onboard BPO over hiring employees in certain job roles. In some cases, brands like Amazon, Vodafone, Netflix, etc., have cut down 90% of their operational cost in areas like customer service and management.

Streamline Processes

We have been screaming this since the very beginning, ‘business process outsourcing’ can streamline different processes. This streamlining can help your business function with more clarity and ease.

In other words, it can help a business reallocate useful talents to places where they are needed. This can help businesses to shed unnecessary weight that can bog down a company.

Potential Risks

Just as BPOs have some fantastic benefits. In the same way, there are some really prominent challenges that you cannot really ignore. These challenges are well-known and can affect your overall business health to a great extent.

Just remember that there are other risks that are there. However, we decided to focus on the more important ones that can really affect your business to a massive extent.

Security Issues

Two of the foremost problems of business process outsourcing are security concerns and compliance errors. BPOs function on data, and data is one of the most precious things on the internet. Businesses need to safeguard their data at all costs.

Therefore, there is a latent concern, ‘what if company data is leaked?’ This is a significant question with very few answers. Yes, there are checks to identify the mole, but by the time they are identified, it will be late.

Deadlocks

The next thing that you need to understand is the deadlocks. Just remember that two sets of employees would come together to work for you. Therefore, going by human nature, things will heat up from time to time.

In fact, this is a significant issue that delays deadlines and deliveries. Honestly, there is no way to deal with this beforehand. This is because you cannot really control human nature and their tendency to butt heads.

The Final Thought

In conclusion, business process outsourcing is a prominent and valuable means to bring down work pressure and improve efficiency at the same time. However, you need to understand that outsourcing also has some really prominent challenges as well. Hence, things are hanging in the balance, and it is upto you to decide what is best for you.

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