Business process outsourcing (BPO) involves transferring a company’s functions to an external specialist, which can include back office tasks and customer service. BPO providers offer outsourcing services and may specialize in specific functions, with some based in low cost areas. The contract between a BPO vendor and client outlines the areas to be outsourced and provisions for modifying the outsourcing arrangements. BPO vendors combat criticisms by ensuring data security measures.
Business process outsourcing (BPO) is the act of transferring a part of a company’s functions or processes to an external specialist. The company may outsource only a part of a particular function, an entire function or several functions. Outsourced functions may include back office tasks such as administration, accounting or payroll services; and front office functions such as customer service. BPO providers are companies that offer outsourcing services and may specialize in specific functions, such as information technology (IT), or a range of functions, such as different types of customer service. They can be based in low cost areas which allows them to offer their services at competitive prices and can allow their clients to increase flexibility and vary the level of services received as needed to maintain a viable business model.
The effectiveness of a BPO provider can be the result of a location in a low cost area combined with a skilled and specialized workforce. Some successful BPO vendor companies are based in countries where the vendor can combine efficient operational costs with English language skills and specialization in particular areas, such as IT services. Other BPO providers may specialize in functions such as human resources or customer service. One aspect of customer service is the call center, which is the function most often associated with outsourcing and the one most frequently encountered by the general public.
The contract between a BPO vendor and its client outlines the areas to be outsourced and provides for managing the interface between the outsourced and internal functions. The client will likely need to appoint certain personnel to supervise the operation of the outsourced functions and monitor them on an ongoing basis. The contract with the client company is likely to contain provisions for modifying the outsourcing arrangements depending on the performance of the BPO vendor. The contract must be flexible enough to allow for changes in the business and economic environment over the course of the contract.
BPO vendors who want to succeed often face outsourcing criticisms that can make businesses reluctant to outsource their functions. Many companies are hesitant to hand over sensitive data to third-party BPO vendors and fear data loss due to negligence or theft. BPO vendors combat these anxieties by ensuring that their business premises are secure and that staff and visitors are subject to security checks when entering or leaving a building. Where IT functions are involved, there will be additional measures to protect data security with respect to data held by the BPO provider.
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