BPO or Business Process Outsourcing is said to be a set of relevant outsourcing which includes the process of contracting of responsibilities and operations of a particular business process to the service provider who calls to be the third party. Primarily, this action was related to the firms which dealt with processing of manufacturing goods. For instance, Pepsi Company outsourced colossal segments of its apt chain of supply throughout different countries.
Business Process Outsourcing is generally classified into the category of back office sourcing which deals with the internal functioning of the business like the finance or human resources and accounting and outsourcing for the front office that endows services related to the customers, like the services provided by the contact centre.
The BPO which is contracted in a different country outside the company’s home country is known as the offshore outsourcing. Moreover, the BPO which is contracted to the neighbouring country of the company’s home country is known as the near shore outsourcing.
Mostly the processes bestowed by the business are related to information technology or IT. This is generally referred to as the ITES- BPO meaning Information Technology Enabled Service - Business Process Outsourcing. Other sub-segments of Business Process Outsourcing are KPO or Knowledge Process Outsourcing and LPO or Legal Process Outsourcing.
Advantages of Business Process Outsourcing:
The basic advantage of Business Process Outsourcing is the manner in which the setup assists generally helps to increase the flexibility margin of the concerned company. However, many sources endow distinct ways according to which they tend to perceive the organizational flexibility. At the time of the 2000s, the set up of BPO provided cost efficiency, allowing a determined extent of flexibility. As the technology advanced and distinct changes took place in the industrial companies, for instance, the shift of the service-oriented contracts rather than product oriented, selected or chose to begin outsourcing from the back office for direct quality management and time flexibility. BPO is a way that helps to enhance the flexibility of distinct organizations in a different manner.
Generally, most of the BPO vendor who provides services is offered their fees on a service basis, utilizing the models of the business like the remote in sourcing and another similar kind of outsourcing models or software development. This step assists the company to gain the relative amount of flexibility by transmogrifying the fixed costs into variable costs. The structure of variable costs assists the company to respond to various changes in a capacity to which is required as it doesn’t bring forth the need for the company to make investments in assets; hence this makes the company aptly flexible.
Apart from managing the flexibility part of the company, the BPO also assists to concentrate on core competencies. The BPO manages the internal competencies without getting loaded by various demands of the concerned bureaucratic restraints. The crucial agenda lies in having a knowledge regarding the basic value drivers so as to ardently concentrate on product leadership, customer intimacy, and operational excellence. Concentrating on more than one of the concerned drivers assists the company to generate a competitive sphere.
The BPO also helps to increase the speed of the processes of the business. The management of the supply chain with an effective utilization of BPO and the partners of supply chain helps to increase the relative speed of distinct processes of the business like the throughput when concerning a company that deals in manufacturing goods.
However, flexibility is just visualized as a starting stage in the life cycle of the organisation. An organization can moreover maintain a certain level of growth while neglecting the business standard bottlenecks. Therefore, BPO enables the firms to keep up with their entrepreneurial agility and speed which otherwise they would have given up to turn in an efficient head as they would have expanded.
Drawbacks of Business Process Outsourcing:
While there include various advantages or benefits of Business Process Outsourcing, there are also few drawbacks which you must know. An organisation that outsources the processes of the business might be prone to communication problems which might delay the assignment or project, data breaches, underestimating costs of running and overdependence on the service providers of BPO.
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