Knowing the Fundamentals of Business Process Outsourcing

Considered one of the monumental breakthroughs of the late 90’s, Business Process Outsourcing is celebrated and used by many organizations nowadays. Despite its relative popularity, though, not many people understand exactly what BPO is. More and more companies are using BPO, and yet few of them understand what it really is. Therefore, a clear definition and illustration of what it can do for companies and global trade is necessary.

What is it?

If you break down the term Business Process Outsourcing, you are left with two important terms: Business process and outsourcing. Business process refers to tasks important in fulfilling the business function of an organization, such as the human resources, payroll, and finance functions. These are only some of the business processes important in all organizations. The other term, outsourcing, refers to using another company to handle certain activities of an organization. In BPO, the basic idea is that you get another company to handle and manage business activities previously stated.

Why does it work?

Globalization is—and it continues to be—a major catalyst and change agent in most organizations. Because of globalization, companies now have to work at a pace many times faster than organizations before our time. Companies right now cannot afford to take one step at a time, because doing so may drastically destroy an organization.

This is where the importance of Business Process Outsourcing comes in. BPO lets another company do certain business functions that are not that critical in the overall operation.  Hence, an organization can go on and focus on more important tasks that can make itself grow. An example would be the outsourcing of customer care functions. By outsourcing the job to call center companies, you don’t have to worry about rigidly training and orienting employees about how to answer common questions of customers. After all, call center companies will do all the training and orientation for you.

How is it different from others?

You should note the distinction Business Process Outsourcing has with other outsourcing activities. One such comparison is with IT Outsourcing. BPO is different from it in such a way that the former deals with activities not essential and fundamental to the main goals or the core product of the organization.

For example, customer care outsourcing is not something that deals with the production of the organization’s output. Rather, it deals with the maintenance of the product and ensuring the stability of such. On the other hand, IT is more focused on the production of the company’s output. Note the inherent and obvious differences between the two, to avoid mistaking one concept for the other. GP

Posted in BPO Fundamentals  on September 23, 2008 - 3:14 am by admin  |