Business process outsourcing

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Business process outsourcing
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Business Process Outsourcing (BPO) is the practice of outsourcing certain business functions to external providers. These functions may include customer service, data entry, human resources, accounting, and other administrative tasks. The goal of BPO is to improve efficiency and reduce costs by allowing companies to focus on their core competencies while outsourcing non-core functions to specialized providers. BPO can be done onshore (within the same country), offshore (in a different country), or nearshore (in a nearby country).

Use of business process outsourcing allow to increase enterprise value. The use of this type of outsourcing is connected with the transfer of company's processes to external service provider, after critical analysis and the improvement of this process. The process is seen as a set of activities requiring inputs and generating result on the output.

Process is described as a structured, measurable set of actions designed to produce a specific result for a specific client. In BPO the contractor not only assumes responsibility for the implementation of the process, but also commits to the reengineering of this process, including the implementation of new technology or its continuous improvement. Such approach usually requires studies on process changes and their impact on cooperation of service provider with other organizational units in company.

From the point of view of the service provider who is entrusted to the same commitment to improving performance as the company, BPO shows significant similarity to transformational outsourcing.

Business process outsourcing classification

There are several types of Business Process Outsourcing (BPO) including:

  • Back Office BPO: This type of BPO involves outsourcing non-core business functions such as data entry, accounting, and human resources.
  • Front Office BPO: This type of BPO involves outsourcing customer-facing functions such as customer service, technical support, and sales.
  • IT BPO: This type of BPO involves outsourcing information technology functions such as software development, network management, and data center operations.
  • KPO (Knowledge Process Outsourcing): This type of BPO involves outsourcing specialized knowledge-based functions such as research and analysis, legal research, and financial analysis.
  • LPO (Legal Process Outsourcing): This type of BPO involves outsourcing legal services such as document review, contract drafting, and legal research.
  • RPO (Recruitment Process Outsourcing): This type of BPO involves outsourcing recruitment and staffing functions such as candidate screening, interview scheduling, and background checks.
  • F&A (Finance and Accounting) BPO: This type of BPO involves outsourcing financial and accounting functions such as accounts payable and receivable, tax preparation, and financial planning and analysis.
  • HRO (Human Resource Outsourcing): This type of BPO involves outsourcing human resource functions such as payroll, benefits administration, and employee training.

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