Business process outsourcing (BPO) has been around for over 20 years. Yet, many professionals and business owners are still not familiar enough about this thriving industry. To help you understand what is BPO, we have compiled and answered the most frequently asked questions.
What is BPO?
BPO involves contracting third-party vendors to provide specific business functions. Although at first BPO solely applied to manufacturing entities, it now applies to the outsourcing of services as well.
Who do you outsource to?
Usually, companies and firms outsource to third-party firms in foreign countries with lower labor rates to save costs. But now you can outsource as an individual or professional either to firms in your own country, or to independent freelancers as opposed to companies.
What are the main types of BPO services?
There are two main types of BPO services: the back office and the front office. Back office services include jobs with no customer interaction such as billing, maintaining records, and accounting.
Front office services, on the other hand, include customer-facing jobs like customer service, sales, and tech support.
How do offshoring, nearshoring, and onshoring differ from each other?
The range of BPO options a business has depends on whether it contracts its operations within or outside the borders of its home country.
“Offshore outsourcing” or “offshoring” happens when a company partners with a BPO firm from another country where there are tax savings and lower labor costs. A US company using an offshore BPO vendor in the Philippines is an example of this setup.
“Nearshore outsourcing” or “nearshoring” happens when a company outsources a business function to a BPO firm from neighboring countries. Using the same scenario, a US company partnering with a BPO vendor based in Canada is considered nearshoring.
“Onshore outsourcing” or “onshoring” happens when a company hires a BPO vendor within its home country, even if they are in different cities or states.
What are the advantages of BPO?
Outsourcing non-core business functions allows your company to be far more flexible. Firstly, you don’t have to invest in fixed assets and can convert them to variable costs. It also increases your flexibility as far as managing your resources is concerned, and helps you adapt faster to industry changes.
Outsourcing some of your business processes can be very cost-effective. You can save from investing in fixed assets and fixed costs. You can also redirect these funds for your core business functions.
BPO firms significantly increase the speed of your business processes. They offer fast response time, thus giving you more time to focus on the core functions of your business. This division of tasks speeds up the whole process which proves vital in business functions such as customer service.
Hiring a BPO firm also means outsourcing the expertise and exemplary services of its manpower. So, if you outsource your accounting tasks, rest assured that only expert CPAs and bookkeepers will handle your financial statements.
What are the disadvantages of BPO?
Communication problems between your company and the outsourcing firm may happen due to various reasons which may include language barriers. Misunderstandings and missed messages can happen, too. Both of you may also follow a different set of standards that may cause a conflict of ideas.
Different Time Zones
Aside from the language issues, differing time zones can also be a downside in hiring a BPO firm. It is hard to communicate anytime you want. Emails may go back and forth, leaving all work pending until everything is sorted out. It is usually the outsourcing company that adjusts their shifts to match your office hours.
Loss of Control
Since you’re outsourcing tasks, you may lose control over the monitoring of how the outsourced staff performs the tasks in real time. But if you know and trust the BPO firm, this shouldn’t be a huge issue.
What are the services to outsource?
Common outsourcing tasks include human resource management, accounting, customer support and service, content writing, marketing, and web and graphic design.
Who is Outsource-Philippines?
Outsource-Philippines is a BPO/KPO firm that offers virtual assistance, data entry, content writing, SEO, social media marketing, PPC, bookkeeping, customer service, and graphic design.
Still got questions on what is BPO? If there are questions that are not on this blog and for the full list of our outsourcing services, you can chat with us live or call +1 (805) 823-4145.