Staying on top of all the different aspects of your business can be a daunting task. Whether it spans a few cities or just a single office, there’s a lot to manage. Needless to say, it can all get a bit much. So, it’s no wonder that so many businesses choose to outsource many of their business processes to professional services. However, the outsourcing of business processes to third-party services will vary from case to case because the needs of every company aren’t the same. In this article, we’ll take you through the many types of business process outsourcing to help you decide which might be the best for you.

What Is Business Process Outsourcing?

The definition of Business Process Outsourcing (BPO) is spelled out in the name. A business will offload some of its secondary processes to one or more third-party providers or vendors. These companies typically specialize in the specific processes that they handle, using their special brand of expertise and experience to ensure everything runs smoothly and efficiently.

Outsourcing also helps newer or overworked businesses that may not have the time, resources, or experience needed to handle these processes. Outsourcing frees these businesses up to focus on their primary business processes.

Types of Business Processes

BPO began in the manufacturing sector as a way to improve supply chains but now encompasses a wide range of sectors. Processes are divided into:

  • Front-office – All the customer-facing operations and processes. This includes everything from marketing and sales to revenue generation and mergers.
  • Back-office – All the behind-the-scenes processes that keep the company running. This refers to management services, HR, security, archiving, etc.

The BPO Market

The global BPO sector is estimated to be worth over $92.5 billion, a number that illustrates the huge demand for these services worldwide. While you may think that this industry only serves the world’s biggest businesses, small to medium companies also make up a substantial part of the total. Many small businesses, for example, routinely outsource their IT and print processes to external providers.

However, there are many more processes that Business Process Outsourcing can take care of.

The Many Forms of Business Process Outsourcing

BPO providers come in all shapes and sizes but are generally grouped into three main categories:

  • Location-Based
  • Structural
  • Service-Based

These categories aren’t mutually exclusive; they merely describe a distinguishing feature of a particular BPO provider. Let’s take a look at what sets each category apart:

Location-Based BPOs

Depending on the size and reach of a business, some processes may be more effectively handled in a different location. This could be to cut costs (by outsourcing processes to countries where labor costs are lower) or to facilitate expansion into new markets. BPO vendors provide both the resources and expertise to make both these cases happen.

Location-based BPOs can be divided into three groups:

  • Offshore – Bigger businesses and multinationals often ship many of their processes to regions that offer cheaper labor, political stability, tax breaks, and/or easier access to resources. Common examples include call centers, labor, or manufacturing.
  • Nearshore – Sometimes, a process doesn’t need to be outsourced to the other side of the world because it can be done as effectively in the country next door. Neighboring countries often offer many advantages, including lower transport costs, shared languages, and similar time zones.
  • On-shore – Domestic outsourcing could cross state lines or take place just a few blocks away from your premises. A local BPO service can offer many benefits, such as familiarity with the area, industry experience, and similar cultural values.

Structural-Based BPOs

We’ve already looked at what sets front-office and back-office BPOs apart, but there are also middle-office BPO services to consider. The middle-office refers to the world of corporate finance and IT resources.

In finance, the middle-office is all about managing risk and hedging. Financial middle-offices draw upon the resources of both front and back-office services to manage deals and handle investments.

IT middle-office services might help design specialized trading software, or provide contracted software services. These are “big picture” services, which manage market data and keep track of trends. Due to the scale of the services that they offer, IT middle-office BPO services are typically expensive, and therefore usually associated with much larger businesses.

Service-Based BPOs

This category addresses the specific types of services that a BPO vendor handles. Here are some major examples:

  • IT Services – This is easily one of the most commonly outsourced processes. An IT provider can handle everything from network security to regular backups and data compliance. Most providers will monitor your networks and offer assistance in emergencies.
  • Knowledge – Some providers offer their expertise in a particular area. This can range from creative input to managing accounts and taxes. Some providers offer legal advice, while others conduct research or PR on a company’s behalf. This can be useful for businesses that are not large enough to hire their own staff in a certain area.
  • Print Services – Printing is a vital part of most businesses, and it can be expensive to handle in-house. A print services provider can offer better rates, expertise and regularly maintained machines. Should anything break down, they’ll also be around to help.
  • Customer Service – Some providers handle calls, emails, and customer queries for a number of different companies simultaneously. Their capabilities can be a lifeline for businesses that aren’t quite able (or experienced enough) to provide professional customer service in-house.
  • Manufacturing – Need a service to produce something that you can’t? These providers supply the manufacturing tools and labor force to get the job done.
  • Shipping and Logistics – Some BPOs have the fleets and transport networks in place to handle logistics that a small business can’t. E-commerce stores in particular often rely on the services of these providers.

Choosing the Right Partner

If you’re not looking to offshore your business processes halfway around the world but are looking to on-shore some of your technology and IT needs, then it helps to choose a local partner who knows their business and the landscape intimately. If you’re in Philadelphia, Eastern Pennsylvania, New Jersey, or Delaware, KDI Technology is that expert.

We’ve been bringing business and technology together for years and are standing by to help you future-proof your business. Learn more! Contact us today.