Business process outsourcing involves contracting of the responsibilities and operations of particular business processes (or functions) to a third party service provider. BPO – Business Process Outsourcing is a subset of outsourcing. It is a valuable technique for organizations and companies searching for better ways to accomplish high performance by minimizing risk, controlling costs, increasing transparency, and fostering collaboration. BPO can be contracted outside the country of the company involved; this is known as offshore outsourcing. On the other hand, if BPO is contracted to an organization’s nearby country, it is known as near-shore outsourcing.
One of the outstanding benefits of BPO is its manner of assisting an organization to increase its flexibility. Company’s flexibility enhancement through business process outsourcing is achieved in different ways.
Two Distinct Categories of Business Process Outsourcing
Basically, two categories of BPO are identifiable;
Back Office Outsourcing: the functions included in back office outsourcing are internal business functions such as finance and accounting or human resources.
Front Office Outsourcing: customer-related services are included in front office outsourcing. Example of front office outsourcing is contact center services.
Benefits of Business Process Outsourcing
Large part of business process outsourcing services is offered on the basis of fee-for-service. This enhances the company’s flexibility greatly by transforming fixed costs into variable costs. What is the import? A variable cost structure is very helpful to an organization responding to changes in particular capacity, and a company would not need to invest in assets thus enhancing the company’s flexibility.
Outsourcing has the capacity to provide a company with increased flexibility in the aspect of resource management. It may also lower the time required to respond to major environmental changes.
Also, when BPO is involved, a firm is able to concentrate on its core competencies with much ease, and is not affected by the demands of bureaucratic restraints. Consequently, key employees are thereby relieved from carrying out non-core processes which tend to take their attention off the major issues of the organization. The secret lies in determining the areas that require more attention – product leadership, customer intimacy or operational excellence.
Thus, when a company’s key employees focus on one of these major areas (since the non-core aspects have been outsourced), the company is more likely to enhance its competitive edge. Also, business process outsourcing enhances organizational flexibility by speeding up business processes.
The importance of organizational flexibility cannot be overemphasized, and one of the best ways to enhance organizational flexibility is to embark on business process outsourcing. When flexibility is highly in place in an organization, a company would maintain its growth goals, while keeping away from standard business bottlenecks. Also, Business Process Outsourcing is a great strategy for a company to retain its entrepreneurial agility and speed.
Daven Michaels is an award-winning outsourcer and author of the book, ‘Outsource This!’ Daven has been honored more than any other individual or outsourcing organization. You can get more information on outsourcing by visiting www.123Employee.com