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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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