Business process outsourcing (BPO) involves partnering with a third-party to deliver services to your company. Here’s how using a BPO benefits companies.
There’s a good chance you’ve engaged with business process outsourcing (BPO) services as a consumer without even realizing it. Call centers, IT departments, and quality assurance services are often handled by third-party BPO providers.
For small businesses or startups, which need to carefully manage resources, it often isn’t practical to perform these tasks in-house. In other cases, an organization may simply prefer to focus on their core business competencies and outsource other tasks to a third-party service provider.
Let’s look at what business process outsourcing is, the types of BPO services that exist, and how this partnership can help your organization succeed.
Business process outsourcing (or BPO services) is a type of partnership in which a company hires a third party to perform some of its business functions.
Business process outsourcing can take place nearly anywhere in the supply chain. For example, a manufacturing company might contract with an external service provider for help with data entry, procurement, or inventory management. Or, a healthcare company might work with a BPO vendor that specializes in medical billing and payment processing.
Companies often turn to BPO services when they need to scale quickly, when they need specialized skills or expertise, or as a way to bring down costs. Business process outsourcing can offer major cost savings, as you won’t need to build out a completely new department or hire and onboard new internal employees for the tasks you’re outsourcing.
When it comes to customer support outsourcing in particular, BPOs enable businesses to provide more responsive customer support by making it easier for companies to scale their teams or cover more hours. Such high-quality support is a competitive advantage that improves customer satisfaction.
The BPO industry spans the entire globe, with Asia-Pacific (APAC) countries accounting for a large percentage of the BPO market. Offshore BPO companies in the Philippines alone account for 10-15% of the market. But outsourcing services are found all over the globe, and a significant share of the market operates in (Latin America) LATAM, Europe, the Middle East, and Africa (EMEA), and the US as well.
Business process outsourcing can be broken down into two main categories: front office and back office. These terms don’t refer to where your outsourcing company is actually located, but to the types of tasks they’ll be performing.
Front office BPO services include all customer-facing activities. Call center services and customer support services fall into this category, but so does work like making sales calls and doing market research.
Front office BPO services may also include web design and software development for customer-facing products. For example, a company might contract with a mobile app developer to create a new loyalty app or generally optimize the customer experience of their website.
Back office BPO services can refer to tasks that take place behind the scenes to keep a business running smoothly. These include:
These typically “non-core” tasks aren’t part of a company’s primary business activities, but they help the organization in areas like compliance regulation or data security.
The services that a BPO company offers make up just one piece of the puzzle. You’ll also need to consider where your outsourcing company is physically located.
Here are three types of BPO services defined by their location:
Offshore outsourcing refers to BPO services that are performed far outside of the country where the primary business is located. This is different from “offshoring,” which is when the entire company moves overseas to take advantage of the lower cost of labor or more favorable taxation.
Companies will often use offshore outsourcing so their in-house team can continue to focus on core business operations while the outsourcing company takes care of other tasks like customer support or software QA services.
In some cases, you might want a BPO vendor to supplement your in-house staff with flexible support. This option is especially useful if you need extra coverage at times that are difficult for your existing team to handle, such as on nights and weekends or during a busy holiday period.
Onshore outsourcing, also called domestic outsourcing, works similarly, except the BPO company is located in the same country as your business. Onshore vendors might cost more than offshore vendors, but they share a common currency, language, time zones, and regulatory environment. (Though it is worth noting that many BPOs operate in multiple locations, so some of these concerns might be mitigated if, for example, your offshore BPO team is part of a domestically-based company.)
In some cases, such as LPO services or HR services, it helps to have a BPO with regional expertise.
The third type of outsourcing is nearshore outsourcing, in which your BPO vendor is located in a neighboring country.
This offers some of the same advantages of offshore outsourcing, such as lower labor costs, while keeping some benefits of onshore outsourcing, such as sharing a time zone.
If your company is located in the US, you’ll probably seek a nearshore outsourcing team in a country like Honduras or elsewhere in Latin America that will have more overlap with your business hours.
Often, working with a third-party service provider makes more sense than building a new department from scratch or rapidly scaling your customer service team.
Businesses typically turn to outsourcing for one of these three reasons:
If you run a small business or startup, you and your teammates are probably used to doing a variety of tasks in-house. But as your company grows, outsourcing certain responsibilities can help you focus on your core business activities.
Launching a new department or hiring new team members takes time. If your business is experiencing sudden growth in sales or subscribers, the support of a third-party service provider can help you scale quickly, yet sustainably.
Not every business needs a full-time, in-house HR department or legal team. Plus, it can be difficult to find someone with the right expertise for roles like these.
BPO companies that offer specific services – such as content moderation, customer support, or quality assurance – can help you reduce your team’s focus on work that’s outside your area of expertise.
Business process outsourcing can help you save on operational costs and equipment expenses. That’s partly because your BPO vendor may be based in a city or country with a lower cost of labor. Further, because the BPO will take the lead in hiring and training your outsourced team, you’ll save time and money in these areas, as well.
Also, instead of investing in equipment and infrastructure yourself, you can choose a BPO provider that uses the latest hardware and telecommunications tools with their team. (Note that some software licenses will still be your responsibility, but your BPO can help you determine the best setup for your company and save you from purchasing tools you don’t need.)
Business process outsourcing can save your company time and money by outsourcing tasks that aren’t practical to perform in-house. But with so many types of outsourcing to choose from, it can be hard to know which BPO services are right for you.
PartnerHero offers offshore, onshore, and nearshore BPO services to help your growing business or startup succeed. With flexible terms and rolling contracts, you can find a solution that fits your specific needs.
We offer highly skilled associates based in North America, LATAM, APAC, and EMEA to provide coverage in multiple time zones. All of our associates must meet our language proficiency requirements and demonstrate C1 or C2 English-language skills.
Whether you need customer support, software QA services, trust & safety, or content moderation, the PartnerHero team is ready to help. Get in touch today to get started!
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