Business process outsourcing (BPO) is a specialized subset of the outsourcing industry.
Typically, in this model, third-party companies contract with clients to perform specific elements of a client's operations or to perform specifically designated processes or functions. The model began in the manufacturing sector, where companies contracted with outside manufacturers to service their supply chains, but in recent years BPOs have come to specialize in a wide range of additional areas.
Types of BPO Companies
Companies are often categorized according to whether their services are primarily internal or external. Back office outsourcing companies concern themselves with internal functions within a business. That is, they perform functions that affect only the operations of the business itself, such as human resources or accounting, rather than functions that involve customer interaction. Front office outsourcing, on the other hand, is directly involved in customer communications through facilities such as call centers.
BPOs are also commonly identified according to what services they perform. These may include areas of specialization such as Information Technology Enabled Services, Knowledge Process Outsourcing, and Legal Process Outsourcing, although the list is not limited to these.
Advantage of the BPO Model
The most significant benefit to clients of BPO companies is an increase in organizational flexibility. The particular form this takes for each client will vary according to that client's needs, but the ability to readily diversify functions without substantially altering the core organization remains a primary goal.
For some clients, BPO companies offer an ideal model for cost flexibility. The ability to hire a task-specific workforce on a short-term basis enables the client to avoid the cost of hiring, training, and maintaining such employees itself.
Additionally, BPOs can offer time flexibility. During periods of increased activity or production, clients can outsource surplus production or service hours on a temporary basis in order to readily keep up with demands and meet deadlines.
Business process outsourcing also enables clients to focus on their core business functions and to ease the transition between startup models and larger, more established business infrastructures. These two functions, which both assist the client by providing specialized and expanded services on an as-needed basis, allow companies flexibility in resource allocation and growth management.
BPOs in the Philippines
The Philippines boasts the largest number of call center workers on the planet, having surpassed the previous global leader, India, in 2010. The country's highly educated, English-proficient workforce has attracted clients from around the globe, and the resultant growth in BPO companies has positioned the Philippines as both a global and regional hub of outsourcing activity.
Philippines-based BPOs offer a wide range of services as well, ranging from traditional call centers and medical and legal transcription services to more specialized areas such as financial and accounting functions. Creative and technology-based services are also widely available and include web design, software and game development, and animation. Such services uniquely position the Philippines as a provider of high-value, high-impact services for clients around the globe.