Business process outsourcing (BPO) involves subcontracting various business-related operations to third-party vendors. Formerly, BPO was associated primarily with manufacturing firms, such as Coca-Cola that outsourced large segments of its supply chain. In current usage, BPO generally refers to the outsourcing of services. Here is how business process outsourcing is an effective strategy for growth.
What Is Business Process Outsourcing?
Business process outsourcing is a rapidly expanding service industry. According to the Global Strategic Business Report, released in January 2018, the global market for BPO is projected to reach $262.2 billion by 2022 (up from 88.9 billion in 2017), driven by the cost benefits achieved by outsourcing administrative tasks and the development of new generation technologies, such as big data analytics and cloud services.
Many businesses, from small startups to large companies, look to BPO as a means of controlling operating costs while allowing the company to focus on its core products. Business process outsourcing also will enable companies to gain access to world-class capabilities offered by BPO firms.
Two popular areas in which companies adopt business process outsourcing is in back office and front office outsourcing. Back-office outsourcing refers to contracting a company’s key business operations – such as accounting, payment processing, IT services, human resources, regulatory compliance or quality assurance – to well-versed professionals who can ensure that the business runs smoothly. Front office outsourcing tasks include customer-related services like tech support, inbound and outbound sales, trading and marketing.
The Advantages of Business Process Outsourcing
There are many advantages offered by business process outsourcing. The main advantage that BPO offers business is flexibility. By outsourcing non-key and administrative functions, a business can better allocate resources and time to its key competencies, such as customer service, product leadership, and operational excellence. A business that can focus on its core operations stands a better chance of developing a competitive advantage over competing businesses within its industry.
Also, business process outsourcing offers companies the opportunity to access the latest technological resources that they might not otherwise have access to. Companies that provide outsourcing services exist in a very competitive environment and are continually working to improve their processes by adopting the most recent technologies and practices to beat the competition.
Outsourcing is a Cost-Effective Solution for Companies
Cost considerations are another significant advantage of business process outsourcing. In spite of recent reductions in the U.S corporate income tax, it remains one of the highest rates in the developed world. U.S. businesses can benefit from outsourcing operations to countries with lower rates of income tax because companies pay the tax rate of their host country. This outsourcing serves as a type of cost reduction without the need to sacrifice quality. The outsourcing company can also save expenses if it outsources to a location where in-house labor costs are significantly lower than its home country.
Some of the other benefits of business process outsourcing include fast and accurate reporting, improvements in productivity, the ability to reassign resources, increases in organizational growth due to capital and asset expenditures that are no longer needed, and expansion of a business’ global presence.
Business process outsourcing is a growth industry: one that’s advantages are clear and one your company should strongly consider jumping onboard.
Sequent Solutions is Your Go-to Outsourcing Solution
Outsourcing can make sense for nearly any business. It reduces costs and allows a company to focus on its core competencies while keeping the working processes intact. Outsourcing to Eastern Europe is an attractive and increasingly cost-effective way to find expert freelance workers in IT. Developers from this area – often fully fluent in English – are often a critical part of many successful teams around the world.