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Business process outsourcing (BPO) involves assigning one or more business services to an external provider. From small startups to large enterprises, businesses can employ BPO services as cost-effective solutions to enhance workplace efficiency and drive innovation.
In this article, we’ll explore the BPO industry in-depth: the types of services they offer, the companies they partner with, the advantages of hiring a BPO, and tips for choosing the right BPO company for your business.
Key Takeaways
- BPO has two types: front-office and back-office.
- Customer care, financial & accounting, human resources, IT development, and marketing are the most common BPO services.
- In 2025, the revenue in the BPO market is projected to reach a staggering $414.81 billion worldwide.
Table of Contents
How Does Business Process Outsourcing (BPO) Work?
A BPO company’s primary goal is to help its partners reduce costs and to promote work and system efficiency. To achieve this, business process outsourcing is divided into the back office and the front office. In a nutshell, the back office takes care of internal business processes, while the front office deals with all client-facing tasks.
Here are some examples of their respective tasks:
- Back-office tasks:
- HR and admin tasks
- Billing
- Payroll and accounting
- Quality assurance and data management
- Front-office tasks:
- Sales and marketing
- Client care management
- Technical support
A business can optimize its processes through different outsourcing strategies based on the vendor’s location: offshore, nearshore, and onshore services.
Additionally, a BPO company utilizes various tools and technologies to streamline processes. Business management tools integrate necessary systems to ensure consistent, high-quality output into an already-existing setup within an organization, improving adaptability and increasing opportunities for growth.
Why Do Businesses Outsource Processes?
Businesses call upon the services of a BPO company for several reasons, such as cost-cutting, scaling and growth, and developing a more optimized workflow.
As the famous adage goes, "work smart, not hard.” This is why companies turn to the smarter route by outsourcing their services to external providers. This allows in-house employees to focus on tasks and ideas that generate impactful results. Outsourcing also provides a helping hand for your team, allowing them to use their time to enhance their skills and productivity.
Additionally, a BPO model offers various strategies to save resources, such as reducing the number of employees on their payroll and lowering the demand for working space, equipment, and utility expenses.
Generally, businesses experience positive trends when outsourcing is added to their structure. These are, in essence, the glaring answers as to why businesses procure BPO services.
Businesses Outsource Processes Advantages
The BPO industry has grown massively through the years, largely due to the benefits it provides to businesses. Here are five key advantages of partnering with BPO firms:
1. Cost Reduction
As mentioned, one of the more obvious advantages of utilizing external providers is the cost savings. Instead of shelling out for additional resources — such as office space, personnel, technology, and equipment — businesses can simply obtain the specific BPO services they need. This approach significantly reduces the overhead costs associated with hiring, training, and onboarding employees.
2. Efficiency
Streamlining both core and non-core business functions is another advantage of BPO services. Specialists handle the tasks where you need assistance, which in turn saves time, increases accuracy, and boosts overall productivity.
3. Better Time Management
The amount of time saved through outsourcing is already a good enough reason to consider it. Employees typically spend a significant portion of their day dealing with repetitive tasks. By taking away these redundancies, you free up valuable hours, allowing them to focus on what they do best. Outsourcing enhances time management and allocation of employees.
4. Tackle Focal Points
Outsourcing business processes allows companies to dedicate more time and energy to their primary goals. With less concern over payroll, human resources, recruitment, and other time-consuming tasks, you now have more time to focus on improving your products and refining core functions.
5. Expertise and Specialized Skills
When you procure BPO services, you gain access to industry experts who can help you in the areas where you may lack experience. This eliminates the need to allocate time to learning about secondary business functions. You can rely on outsourcing companies to fill in the gaps while you and the rest of your employees deal with the primary functions of your business.
BPO Companies Services
The BPO industry continues to grow into a multibillion-dollar industry; thus, outsourcing companies keep up with the times and update their services to cope with a range of demands. Here are five of the most common BPO services offered today:
1. Customer Care
Usually, BPO is closely related to call centers — an industry that mainly revolves around customer care. However, improving the customer experience (CX) is a priority across various industries as well.
Hence, companies use customer care outsourcing services to improve their CX and retain customers. Some examples of customer care services BPO companies offer include:
- Scheduling appointments
- Answering customer questions
- Follow-up calls
- Processing payments
- Dealing with orders
2. Financial and Accounting
Generally, these two sectors are integral parts and pillars of every business. This is why many companies today hire outside accountants to deal with their taxes or bookkeeping. The same can be said for payrolls: processing paychecks, tracking PTOs, etc.
3. Human Resource
The best example of human resources BPO services is a professional employer organization (PEO). This is a body that links employment relationships with a company by leasing employees to the employer.
You can look at PEOs as a channel for co-employment, in which the company handles different administrative tasks. Some of these services perform several strategies, but no two services follow the same structure, making it important for clients to provide their wants and needs.
PEO companies help businesses reduce HR-related costs and boost ROI by outsourcing the management of human resources, payroll, worker compensation, and employee benefits. They also dabble in recruitment process outsourcing (RPO) — to learn more, check out our in-depth guide on what RPO is.
4. IT Development
Another common sector where BPO is employed is IT development. Even huge companies like Apple and Microsoft outsource some parts of this sector to smaller businesses or countries where they can get skilled programmers at a lower cost. Some tasks that fall under these BPO services are:
- Website development
- Hosting
- App development and management
- IT infrastructure management
5. Marketing
Marketing is the most common BPO service. Today, marketing is key to the success of a business, which is why many outsource these services to other more skilled businesses. It can span from market research to design, SEO, and even creating a social media marketing plan. Usually, marketing BPO services are more common with small businesses that don’t have the time or right resources to achieve valuable results.
The Top Industries That Procure BPO Services
Let’s take a look at the five industries that heavily rely on BPO services:
1. Tech
The tech trade is arguably in the top-three list of industries that hire external service providers. Businesses in the tech industry should maintain pinpoint strategies and movements that supplement expansion.
For example, hiring nearshore software developers can be a strategic move for tech companies, as it offers cost advantages and flexibility to scale operations quickly without the burden of hiring full-time staff. Outsourcing staffing allows tech companies to retain maximum valuation without demanding staffing requirements.
2. Finance
The Finance industry outsources business processing tasks, particularly in areas like accounting, marketing, and HR. Due to its operational complexities, the financial sector relies on these services more than any other field. By outsourcing specialized tasks that don’t bear much weight, the finance industry can focus all its efforts on profitability and growth.
3. Healthcare
Like finance, healthcare is a complex industry with many operational processes that can be handed over to third-party vendors. There’s little room to sacrifice quality service for minor tasks, which drives this sector to leverage outsourcing in areas such as administration, regulatory compliance, and quality assurance.
4. Accounting
Outsourcing day-to-day tasks helps streamline accounting departments by delegating basic functions such as accounts payable, auditing, billing, regulatory compliance, and receivables. Instead of using crucial resources and members to handle elementary tasks, the organization can make the most of its manpower and talent on pressing assignments.
5. Human Resources
The demand for human resources is substantial, which is why this sector requires external services at higher levels. Outsourcing functions such as payroll, hiring, recruitment, training, insurance, and other HR tasks take the load off HR teams and let them focus on strategic initiatives.
Last but not least, consider feedback from previous or existing customers. While you’re at it, look into the vendor’s rates and if they fit your budget. With this, not only are you assured of great results, but also one that doesn’t break the bank.
How To Choose a BPO Company?
Due diligence is necessary when selecting the right BPO company to meet your business needs, especially since partnering with the wrong provider can be more costly than beneficial.
To help you in this process, here are key areas to consider when choosing a BPO company:
- Services offered: Not all BPOs deliver the same services. Each company may have different specializations that might conflict with your needs. Make sure that both you and the firm are clear on what services you require.
- Technology & security: A trustworthy external services partner should have the right tools and robust security measures in place. It’s crucial that sensitive information remains confidential between your two parties.
- Experience in the field: Choose a company with substantial experience. Experienced BPO companies possess the skills and understanding to navigate various scenarios, providing a competitive edge in the market.
- Communication and support: Successful partnership relies on effective communication. Look for a firm that can effectively convey information and iron out challenges. It’s important to find common ground and a time zone that works with both parties.
- Feedback and cost: Finally, consider feedback from previous or existing customers. Look into the vendor’s rates and see if they fit your budget. With this, you can be confident in achieving great results without breaking the bank.
Businesses Outsource Processes Takeaways
As per the BPO definition, nearly any business task can be outsourced, and today, there’s hardly a company that doesn’t outsource some of its services. Hence, it comes as no surprise that the revenue in the BPO market is projected to reach a staggering $414.81 billion in 2025 worldwide.
BPO helps lower costs, increase efficiency, and provide companies with more free time to focus on their services and products. So, whether you choose to outsource to IT companies or digital marketing agencies, ensure you select a reputable BPO company that doesn’t have hidden fees, fosters clear communication, and provides high-quality BPO services.
