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Business Process Outsourcing – Meaning, Types and Benefits of BPO

When a businessman starts doing a business, he has to perform several activities to run his business. Like marketing, manufacturing,…

By bellathomas , in Business Finance Technology , at February 23, 2021 Tags: , , , ,

When a businessman starts doing a business, he has to perform several activities to run his business. Like marketing, manufacturing, selling, and advertising. It is possible that the business might not be an expert in all aspects of business activities. A single person cannot be perfect in all things and needs to take help from a third party. A process where a business takes help from a third party by outsourcing its task to the third party is called Business Process Outsourcing.

Suppose, a business wants to advertises its products and services but is not aware of how to do marketing. It will then contact an Advertising Company, that is expert in doing advertising tasks, and hires an advertising agent. The 3rd parties, to whom a business outsources its work, are called Outsourcing vendors. These vendors train their employees perfectly according to the services they provide to different businesses. To see a more transparent picture of business process outsourcing, just keep on reading.

Types of Business Process Outsourcing

Business process outsourcing is divided into two major bases, based on the process and based on region. Based on the process is further divided into two categories.

  • Back-office outsourcing
  • Front Office outsourcing

However, business process outsourcing based on the region is distributed into three categories.

  • On-shore outsourcing
  • Near-shore outsourcing
  • Off-shore outsourcing

1)      Based on Process

·         Back-Office Outsourcing

A business accomplishes abundant activities within its organisation like payroll, recording and summarising business transactions, data entry, and numerous more. When a business outsources these types of task to a third party, then this thing is called back-office outsourcing.

·         Front-Office Outsourcing

When a business wants to provide customers with care service or urge to take feedback about its products and services, but the business is unable to undertake this task due to whatsoever reason. The business surely will need to outsource this task by contacting a call centre or outsourcing vendor, who are well skilled in performing such tasks.  This type of outsourcing is called front office outsourcing, where a customer calls the business and a call agent receives the call to resolve the customer’s query.

2)      Based on Region or Locality

On-Shore Outsourcing

On-shore outsourcing is where a business finds an outsourcing vendor within its region or locality to outsource its task. For example, if a business in Pakistan outsources a task to an outsourcing vendor, who is in the same locality or region, then this is called on-shore outsourcing.

Near-Shore Outsourcing

Near-Shore outsourcing is the outsourcing where a business finds an outsourcing agent who lives nearby to its locality or region, and who does not live in the same locality or region. For example, if a business of China outsources its task to a neighbourhood country like Pakistan, then this outsourcing is called near-shore outsourcing.

·         Off-Shore Outsourcing

Off-shore outsourcing is a type of outsourcing where a business finds an outsourcing vendor who is far from its region or locality. For example, a business of India outsources its tasks to a far country like the USA, then this outsourcing could be referred to as offshore outsourcing.

Benefits of Business Process Outsourcing

Business process outsourcing has a good number of benefits, from which a few are as follow,

1.      Cost Saving

When a business does not know about a particular activity, and still tries to execute that particular task anyways. The output will be a risk; it could be good or a complete scrap. By outsourcing this task, you can prevent wastage and save your money being thrown away. A BPO company trains its employee in such a manner that they perpetrate their tasks efficiently.

2.      Time Saving

It is said that, “Time is Money”. Like money, time is also of great importance. When a business performs a task in which it is not well skilled, it only wastes its time and money as well. Instead, it can outsource that task to an outsourcing vendor to get it done flawlessly.

3.      Unable to Focus

When a business undertakes numerous tasks within its organisation and cannot pay attention to a particular task, outsourcing it could be a good option. By doing so, it can gain it done faultlessly. The competent employees of BPO company will execute that task in such a manner that the company will not be able to achieve itself.

4.      Lack of Knowledge

When a company does not have enough knowledge about a particular field of task. Investing money in performing such a project where a company have no clues, would be nothing but idiocy. However, by outsourcing it, the task will be done in exceptional way with a comparatively low rate as if a business tries to accomplish it itself.

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