Business Process Outsourcing: What It Is and How To Do It

Business process outsourcing is the contractual transfer of core business processes from one company to another. For example, a law firm might outsource the administrative tasks associated with hiring and managing lawyers. BPO can be used for a variety of purposes. Companies with complicated processes often find BPO useful for streamlining and standardizing their workflow. For example, a financial services company that processes many loan applications might find BPO an attractive option for dramatically simplifying its workflows.

• Cost savings: BPO can save companies time and money. For example, an insurance company that outsources its claims process could eliminate employees tasked with handling the paperwork associated with those claims.
• Better customer service: BPO can improve customer service by freeing employees from routine tasks and allowing them to focus on more complex work.
• Improved employee morale: BPO can improve the morale of a company’s employees by allowing them to work in more flexible and interesting roles.
• Improved work/life balance: Some employees prefer working outside of the traditional 9 to 5 hours. BPO can allow those employees to schedule their shifts when it’s most convenient for them.

• Higher risk of errors: With BPO, there’s a higher risk that errors will be made. If those errors end up causing problems for customers, it could create a liability for the company.
• The increased cost of change: BPO can be expensive to change. For instance, if a law firm decides to change the administrative structure of its operations, it will likely have to hire a new team of staff to implement that change.
• Increased risk of fraud: BPO companies are not always required to perform due diligence prior to partnering with other companies. BPO companies also tend to partner with companies with similar business models, increasing the risk of fraud.

• Service level management: This type of BPO typically involves managing service delivery processes like scheduling, resources, and quality.
• Sales process outsourcing: Companies often outsource sales processes to lower costs and increase sales volume.
• HR process outsourcing: Many organizations outsource managing their human resources processes.
• Customer care outsourcing: Many companies outsource customer care services to reduce their costs for handling complaints and improve their customer retention rates.
• Financial process outsourcing: In this type of BPO, financial services organizations partner with other companies to assist with their financial processes like bookkeeping and payroll.

Business process outsourcing has become a popular approach to cost reduction and efficiency improvement. However, implementing BPO is not without its risks and challenges. It can be a beneficial approach to streamlining company operations and improving employee morale. While BPO can offer many benefits, it’s important to consider all the risks and challenges associated with it before jumping into it. BPO can help your organization save time and money by eliminating underutilized employees while also improving customer service and work/life balance for your employees. It’s important to weigh the pros and cons of BPO carefully before implementing it within your own organization.