Business Process Outsourcing (BPO)

Definition - What does Business Process Outsourcing (BPO) mean?

Business process outsourcing (BPO) is the contracting of non-primary business activities and functions to a third-party provider. BPO services include payroll, human resources (HR), accounting and customer/call center relations.

BPO is also known as Information Technology Enabled Services (ITES).

Techopedia explains Business Process Outsourcing (BPO)

BPO categories are front office customer services (such as tech support) and back office business functions (such as billing).

The following are BPO advantages:

  • Business process speed and efficiency are enhanced.
  • Employees may invest more time in core business strategies to bolster competitive advantage and enhance value chain engagement.
  • Organizational growth increases when capital resource and asset expenditures are not required, which averts problematic investment returns.
  • Organizations are not required to invest in unrelated primary business strategy assets, facilitating a shift in focus to specific competencies.
BPO risks include:
  • Data privacy breaches
  • Underestimated running costs
  • Overdependence on service providers

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