Just about any aspect of corporate function can be outsourced. It wasn’t until the late 80s when the outsourcing business came to be known as such. Prior to the period, the word often used is subcontracting. Airlines in the US and Europe have been doing it since the early pioneering days of commercial aviation. They have travel sales agents subcontracted to locals in the countries they fly to. The also have airport check-in and baggage handlers as well as aircraft cargo loaders and maintenance teams who are not from the airlines but are locals from airline ground handlers in the countries they operate. So, the outsourcing business is not new. It just got a new fancy name called business process outsourcing or BPO which makes every business process engaged in by a company, a potential activity for outsourcing.

Outsourcing Companies

So now you have companies who sell BPO services often with specialties in back office processes like accounting and HR functions as well as front office processes like customer contact functions or call centers. The larger BPO companies like Accenture and IBM offer both. One common attribute common to most of these companies is that they are based in low labor cost countries. That’s because the main advantage of BPO is to significantly shift high cost labor component in companies based in industrialized countries like the US and Western Europe to low labor cost countries. BPO companies are often found in India, Eastern Europe, the Philippines, and South Africa and in countries with high English literacy but low wages relative to their US and European counterparts. China is starting to catch-up but is still in the thick of learning their English that would give confidence to US and European companies.

Contact Centers

One of the first BPO companies provided customer contact or call center solutions for many US and European countries with large customer base who needed to call them for after sales support. Credit and Debit card companies like VISA outsource their customer hotlines to BPO companies specializing in front office operations like Canadian based Telus whose call center operations are based in the Philippines. Same with Microsoft who has outsourced its IT help desk to Accenture operating in the Philippines and India.

Back Office Outsourcing

The biggest BPO company as of 2008 is a toss-up between IBM and Accenture. They have large global operations in low cost countries notably India, the Philippines and Eastern Europe like the Czech Republic and Slovakia. Accounting is a major back office service they provide, followed by health care fulfillment processing.