What are BPO Services?

Business Process Outsourcing (BPO) is the process of hiring another company to handle business activities for you. It is a subset of outsourcing that involves the operations and responsibilities of specific businesses processes to another service provider. BPO that is contracted based in another country is called Offshore Outsourcing, and BPO on nearby country is called Nearshore Outsourcing. BPO is also categorized as IT-enabled services. Some sub-segments of business process outsourcing industry are KPO (Knowledge Process Outsourcing) and LPO (Legal Process Outsourcing).

BPO is a type of outsourcing that focuses on hiring a third-party service provider to do IT-related operations, typically categorized into back office outsourcing – such as application management and development, data center operations, and also includes internal business functions like human resources, accounting and finance, and customer related services.

In the beginning, Business Process Outsourcing generally consisted of outsourcing processes like payroll, and then it grew to include employee management. Now it covers more functions that are considered ‘non-core businesses’ to the primary business strategy. Now it is common for organizations to outsource financial and administration processes, human resources, call center and customer service activities, accounting and payroll.

BPO is also frequently referred to as ITES (Information Technology-Enabled Services). Since mostly it includes business processes on some form of automation, which performed services are enabled by IT. The derivative of BPO is KPO (Knowledge Process Outsourcing), which is considered by some to be a subset of BPO, KPO includes those activities that require greater skill, knowledge, education and expertise to handle. For example, whereas an insurance company might outsource data entry of its claims forms as part of a BPO initiative, it may also choose to use a KPO service provider to evaluate new insurance applications based on a set of criteria or business rules; this work would require the efforts of a more knowledgeable set of workers than the data entry would. The current definition of KPO encompasses R&D, product development and legal e-discovery, as well as a number of other business functions.

Also coming into use is the term BTO (Business Transformation Outsourcing). This refers to the idea of having service providers contribute to the effort of transforming a business into a leaner, more dynamic, agile and flexible operation.