BPO stands for business process outsourcing. To begin with, business process outsourcing (BPO) was associated with manufacturing firms and is basically subset of outsourcing which involves contracting the responsibilities and operations of a particular business process to a third-party service provider. There are two different categories of BPO; back office outsourcing and front office outsourcing.
Back office outsourcing
Back office outsourcing is related to internal business functions such as finance & accounting or Human Resources
Front Office Outsourcing
Front office outsourcing is related to services which are mainly customer related services such as contact centre services.
Benefits of Business Process Outsourcing:
First and foremost the main advantage of all and any BPO is how it helps increase and enhances the flexibility of a certain company. It does so in various ways. One way to enhance flexibility is to ensure a variable cost structure by turning fixed assets into variable assets and they help to do so by using outsourcing models or software development. This prevents the company to invest in fix assets hence the company becomes more responsive to change. Moreover, BPO focuses on the company’s need to gain a competitive edge by helping the company to concentrate on its main value drivers; core competencies, operational excellence or product leadership. BPO also helps enhance organizational flexibility which they achieve by speeding up the business process. Thus BPO therefore allows businesses to regain their entrepreneurial agility and speed.
Threats of Business Process Outsourcing & Measures that may be taken to avoid these threats:
The main threat of Business Process Outsourcing is Risk. It creates a different relationship between the organization and its contractor. This difference comes from the risk of losing independence, a change in the work pattern and attitudes of employees and running cost underestimations. And there is always a technological pressure. But there are certain measures that can be undertaken to avoid these threats and achieve any benefits with BPO. The most helpful measure you can take is to set up a BCM. A BCM is a business continuity management model. A business continuity management model ensures to manage outsourcing in a very organized and structured way, minimizes certain risks, avoids possible threats and maximizes a positive outcome. Business continuity management model consists of a set of a series of steps, to successfully determine, manage and control the possible processes of a certain business that are or may be outsourced.