What Is BPO & How to Get Started For Your Business

What Is BPO & How to Get Started For Your Business
Article by Zarah Ariola
Last Updated: April 29, 2022

“BPO” has been thrown around the business space in every conversation. What does BPO stand for, you ask? BPO meaning Business Process Outsourcing is an assignment of more or multiple IT-intensive services to an external provider.

The BPO industry has been around since the early 1980s and up to now, it continues to grow into a multibillion industry, supporting businesses as third-party service providers.

For anyone not familiar with the industry, hearing the question, “what is BPO?” is simply answered as an industry closely related to call centers abroad. The key difference between the two is that Business Process Outsourcing companies offer different business functions across different departments, while call centers strictly handle phone calls.

In this article, we’ll dive deeper into the BPO industry: the types of services they offer, companies they partner with, the advantages of hiring one and some tips on choosing the right BPO company for your business.

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How Does Business Process Outsourcing (BPO) Work?

There are multiple areas where business process outsourcing comes into play. From small startups to large enterprises, businesses can employ the services of an external service provider to push for innovative services in today’s constantly changing and dense business space.

What is a BPO company’s primary goal? It is to help its partners reduce costs and to promote work and system efficiency. Business Process Outsourcing is divided into back office and front office. In a nutshell, back office takes care of internal business processes while front office deals with all client-facing tasks. Here are some examples below:

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

The industry touches on multiple categories based on the vendor’s location. A business can optimize its processes by different outsourcing strategies such as offshore, nearshore, and onshore services. Moreover, all three can come into play according to the needs of a business.

A BPO company adopts tools and takes advantage of technology and software to ensure that all processes are streamlined. Business management tools appoint necessary systems to inject consistent high-quality output into an already-existing setup within an organization, also improving adaptability and increasing opportunities for growth.

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Why Do Businesses Outsource Processes?

Businesses call upon the services of a BPO company for several reasons. One might look into the cost-cutting benefits, growth, a more optimized workflow, and more. Generally, businesses start to follow a positive trend with outsourcing added to their structure.

As the famous adage says, "work smart, not hard,” companies turn to the smarter route by outsourcing their services to external providers. This lets in-house employees focus on tasks that allow them to contribute and give impactful results. Outsourcing provides a helping hand for your team, allowing them to use their time to improve in their craft. That said, outsourcing offers more benefits to a business.

A BPO model offers a variety of outsourcing strategies to save resources. The list includes multiple ways that work according to the needs of a business. For some, it narrows down the list of employees on their payroll and demands less working space and equipment, as well as utility expenses.

These are, in essence, the glaring answers as to why businesses procure BPO services.

The Advantages of Hiring a BPO Company

The BPO industry has grown massively through the years, and this peak is reliant on the benefits it offers to businesses. Here are five advantages of hiring BPO firms:

  • Cost reduction  As mentioned, one of the more obvious advantages of utilizing services from external providers is the cost savings that go with it. Instead of shelling out for additional resources (office space, people, technology and equipment), businesses resort to getting the specific BPO services they need. As a result, a sizable chunk of the overhead cost goes toward employees, training and onboarding processes.
  • Efficiency – Streamlining core and non-core business functions is another advantage of BPO services. These specialists take care of functions where you need them to, which in turn saves time, aids in accuracy and boosts productivity.
  • Better time management – The amount of time you can save is a good enough reason to carry out outsourcing. Workers typically spend half of their time dealing with repetitive tasks. Taking away the redundancy frees up hours spent on the aforementioned processes. Outsourcing enhances time management and allocation of employees while allowing them to focus on what they do best.
  • Tackle focal points – Outsourcing business processes allow any company to dedicate time and energy to its focal points. There are fewer things to worry about without the basics taking up too much time. You can worry less about payroll, human resources and recruitment, and other time-consuming tasks. Since you now have more time on your hands, you can now focus on improving your business’ products and other core business functions.
  • Experience – When you procure BPO services, you let experts in the field help you in the areas you're lacking. There’s no need to allocate time learning the works of 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.

The Services Offered by BPO Companies

As the business space introduces ever-changing elements to the table, outsourcing companies keep up with the times and update their services to cope with a range of demands.

The list of services includes customer interaction, back and front-office transactions, IT and software operations, finance and accounting services and human resources.

More than that, companies start to present subspecialties that pursue the following: information technology-enabled services, knowledge process outsourcing, legal process outsourcing and research process.

For instance, a Professional Employer Organization (PEO) 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 dbble in recruitment process outsourcing - find out what is RPO.

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The Top Industries That Procure BPO Services

What is BPO’s top industry collaborator? Let’s take a look at the five industries that heavily rely on BPO services:

  • 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. Why? It offers cost advantages and the flexibility to scale operations quickly without the burden of hiring full-time staff. Considering that, third-party vendors allow tech companies to retain maximum valuation without demanding staffing requirements.
  • Finance - this industry is known to lean on outsourcing their business processing tasks, particularly accounting, marketing and HR. The financial sector demands these services more than any other circle due to the operational complexities compared to other businesses. BPO services can assist and prevent certain functions from losing their objective. Outsourcing specialized tasks that don’t bear much weight allows the finance industry to fixate on profitability and growth.
  • Healthcare - like finance, healthcare is a complex industry with a range of operational processes that can be handed over to a third-party vendor. There’s no room to sacrifice service quality for minor tasks, which prompts the field to take advantage of administration, regulatory compliance and quality assurance outsourcing is known for.
  • Accounting - outsourcing day-to-day jobs rounds off accounting departments, taking away basic tasks like 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.
  • Human resources - there’s a good volume of demand in the direction of human resources, which is why they require external services at higher levels. Hiring a workforce that oversees payroll, hiring, recruitment, training, insurance and other human resources tasks takes a load off their shoulders.

How to Choose a BPO Company?

As the world continues to require services of the Business Process Outsourcing agencies, a good number of organizations start to sprout left and right. However, due diligence is necessary to find the right BPO company.

Understanding what is BPO? It’s just the beginning. Finding the right one is another — and it can be tricky. Never go for the very first name you come across because not everyone can produce the results you need. Partnering with the wrong provider could be more costly than effective.

All things considered, here are some of the areas to look at when choosing a BPO company:

  • Services offered - Not all BPOs deliver the same services. These companies may bear different specializations that might conflict with your needs. Make sure that you and the firm are on the same page in terms of what services you need to be covered.
  • Technology & security - Having the right tools and security is among the vital characteristics of a trustworthy external services partner. Keeping sensitive information out of sight and within the two parties is important. Additionally, check if the company follows top-notch security measures.
  • Experience in the field - You should go for a company that boasts quality experience. Experienced BPO companies have a set of skills and a solid understanding of scenarios that can happen. The firm’s experience helps introduce a competitive edge in the market over other names.
  • Communication and support - No successful partnership works without communication. It is a vital aspect of your hunt for a reliable third-party vendor. Consider a firm that can effectively convey messages and iron out challenges. Find common ground and a time zone that works with both parties.
  • Feedback and cost - 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.
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