So many aspects are involved in running a business, from marketing and sales to customer relations, HR, and so on. As businesses grow, it can become tricky to handle all those different areas by yourself, which is where the concept of business process outsourcing, or BPO, comes into play. Increasingly, more and more companies are making use of BPO, but what is it, and how does business process outsourcing work? This guide will explain all you need to know.

What Is Business Process Outsourcing? A Definition

In simple terms, business process outsourcing is when a company subcontracts or outsources some of its operations to another firm or business. For example, a company might hire a marketing firm to take care of everything marketing-related, allowing the company itself to focus on other areas.

Historically, BPO was mainly used by big manufacturing brands that needed to outsource certain elements of their operations. But nowadays, BPO is much more widely used by brands in a range of different industries for everything from mailroom services to tech support.

Types

We can broadly categorize BPO into two main types: front-office and back-office.

  • Front-office – This type of BPO focuses on a business’s customer-oriented elements, like marketing, sales, or user support.
  • Back-office – Back-office BPO is concerned with key operations occurring in the business, like HR and accounting.

You can also classify BPO into different categories based on where the process handler is based, including on-shore, near-shore, and off-shore variants.

  • On-shore BPO applies to service providers in the same country as the hiring firm.
  • Near-shore outsourcing is when the service-providing business is situated in a nearby country, like Canada and the U.S. or France and Spain.
  • Off-shore BPO is when you bring in a business in a far-away country, like a U.S. firm hiring a Chinese firm to handle part of its supply chain management.

Why Do Companies Use Business Process Outsourcing?

You know what BPO is, but what makes it appealing to so many businesses? BPOs have many benefits that may interest businesses of varying sizes, from brand-new startups to well-established enterprises.

Easing the Burden on the Workforce

One of the main benefits of business process outsourcing is how it can ease the burden on your existing workforce. Instead of having your workers tackle every single part of your operations, you can hand some of their responsibilities over to a third-party firm. This frees them up, allowing them to focus more of their time and energies on things that matter.

Expert-Level Assistance

Another big benefit of BPO is that it provides you with expert-level aid in the services you choose to outsource. For instance, if you outsource your payroll management to a proven payroll firm, you’ll get high-level payroll-related services. This can lead to various benefits, like faster growth and saved money.

Save Time and Money

There are many ways in which business process outsourcing can help save a company both time and money. For example, let’s say you want to provide customer user support. If you did it alone, it would involve hiring workers and buying equipment. However, you can avoid many of those big overhead expenses if you outsource the service.

Keeping Up With the Competition

The simple fact of the matter is that more and more businesses are outsourcing processes. Statistics show that 71% of financial service firms outsource certain services, for instance. If you want to keep up with your rivals and have the freedom to focus on the areas that matter most to your business, BPO is a veritable necessity.

Room to Grow

Growth is the primary aim of countless businesses, but if you bog yourself down and take on too much work, you may never achieve your growth objectives. Investing in BPO is a great way to give your business the scope and space it needs to evolve. Otherwise, you could find yourself stuck in a rut while competitors move ahead.

Are There Any Downsides?

We’ve seen the many advantages of BPO, but it’s not all smooth sailing. There are some negative points to take into account, and many business owners hesitate to work with outsourcing firms. Here are some of the possible risks to consider.

Security Risks

Security is one of the biggest issues many business owners worry about concerning BPO. In fact, 35% of organizations admit being wary about sharing their data with other firms. When you work with a service provider, you’re counting on them to maintain the same standards of care and security as your own firm, which may not always be the case.

Communication Issues

This isn’t necessarily an issue when investing in on-shore BPO. But if you work with off-shore firms, there’s a clear risk of communication problems. Firms may have different native languages, and certain requests or messages may get lost in translation, leading to costly delays or even mistakes while providing various services.

Unscrupulous Providers

Finally, there’s also a risk that the firms you outsource to may not be as trustworthy or reliable as you hoped. Again, this is especially true when outsourcing to companies on the other side of the world, as you may not easily be able to vet them or find reliable testimonials. This is why it’s so crucial to research the firms you want to work with and only deal with trusted, proven agencies.

Outsource to Take Your Business to the Next Level

Despite a few potential risks and downsides, BPO is generally a very effective and efficient option. In some cases, it’s the best way to build up your brand and hit your targets for growth and profit. That’s why all small and growing businesses should consider outsourcing cybersecurity, accounting, document processing, and more.

For back-office business process outsourcing in Philadelphia, eastern Pennsylvania, New Jersey, and Delaware, IMR Digital is a name you can count on. Contact us today to learn more and discuss the details of your BPO needs.