What is a BPO?

The meaning of BPO

BPO simply stands for business process outsourcing. It is delegating certain elements of your company’s activities to another business.

A brief history of business process outsourcing (BPO)

Business process outsourcing has its origins in the 1980s when US companies began to look for ways to cut costs by outsourcing certain non core processes. These early outsourcing arrangements were typically low-level tasks such as data entry, customer service or telemarketing.

Outsourcing gradually evolved and grew in popularity over the next few decades, with companies increasingly turning to BPO for a wider range of activities, including more complex processes such as HR functions, finance and accounting, and even IT services.

With businesses growing more reliant on third-party providers, BPO companies began adopting creative ways to name their outsourcing based on the services handled by the BPO company.

Names you may now here to describe business process outsourcing will include:

Although the name may change, they all fall into the category of business process outsourcing (BPO).

Different types of Business Process Outsourcing

There are three main types of business process outsourcing:

Offshore BPO

When someone first mentioned business process outsourcing to you, this was probably the first type of BPO vendor that came to mind. Offshore outsourcing simply involves the delegation of business processes to a third-party provider in a different country or continent, most often one with a lower cost of labor.

Nearshore BPO

As the name suggests, nearshore outsourcing is very similar to offshore outsourcing, but with one key difference: the external provider is located in a neighboring country rather than a distant location. This can offer some advantages in terms of time zone alignment and cultural compatibility.

Onshore BPO

Also sometimes known as domestic outsourcing, onshore BPO involves delegation of business processes to a third-party provider within the same country. While this may seem like an unnecessary expense for some companies, onshore BPO can offer advantages in terms of language, culture and legal compliance.

What does a BPO company do?

A BPO handles the elements of your business processes so you can focus on your core services and make better use of resources. By outsourcing non-essential activities, businesses can reduce costs while still maintaining quality standards.

Front office BPO providers are well versed in services such as:

Back office BPO companies can help with business functions such as:

  • Administrative functions
  • Data entry & cleansing
  • Payroll processing
  • Accounts Receivable
  • Accounts Payable
  • Human Resources (HR)
  • Recruitment
  • Information Technology Services (IT)
  • Quality Assurance

The reality is whatever type of service you are wishing to outsource, there is a BPO service provider ready to handle any business function.

A BPO can also have subcategories for its industry specialties such as:

  • Legal Process Outsourcing (LPO)
  • Knowledge Process Outsourcing (KPO)
  • Recruitment Process Outsourcing (RPO)

Why use business process outsourcing (BPO)?

Access to skilled labor

When you outsource business processes to a BPO, you access a team already trained and equipped with the necessary skills to get the job done. This is especially beneficial for businesses that don't have the resources to train their own staff.

Cost Savings

One of the main reasons businesses choose to outsource is to reduce costs. When you outsource business processes, you only pay for the services you need, when you need them. By being able to save money on running costs such as labor and office space, outsourcing can help you free up revenue that can be better served by developing your business's core functions.


Some BPO vendors offer flexibility in terms of scaling up or down the number of resources working on a project depending on your needs. This can give you a competitive advantage by being able to ensure your company is always 'lean'.

Improved quality

Business process outsourcing can improve quality for some firms rather than keeping the service in house. This is because some BPO companies have the economies of scale and scope to invest in the best technology and processes to deliver a high-quality service. They can also draw on a larger pool of skilled workers than most firms could hope to retain internally.

Time zone differences

Time zone difference can be leveraged for “follow the sun” workdays where tasks are handed off between countries as the day ends in one and begins in another. This allows for work to be completed 24 hours a day, 7 days a week.

Focus on core activities

Outsourcing non-vital or low-value tasks to BPO companies allows you to focus on your business's core competencies. This can lead to increased efficiency and effectiveness as your company can devote more time and resources to activities that generate revenue and growth.

Things to consider using a third party service provider

When considering outsourcing some of your business operations, there are a few things you should take into account beforehand:

The type of work you want to outsource

Make sure you are clear on what exactly it is you want to outsource. Once you have a good understanding of this, you can start to look for providers that specialize in the relevant services.

The provider's reputation

It’s important to do your research on any potential provider to make sure they are reputable and have a good track record. Ask for references from previous clients and read online reviews to get an idea of what others think of.

Outsourcing budget

Outsourcing can be a cost-effective way to run your business, but it’s important to know how much you’re willing to spend on BPO services. Make sure to get quotes from several different providers so you can compare costs and value.

How long do you need the service for?

When signing a contract with a BPO company, make sure you are clear on the terms of the agreement. Find out how long the contract is for and what happens if you need to cancel it early.

What are the risks involved?

There are always risks involved when outsourcing, so it’s important to be aware of them. Make sure you understand the potential consequences of outsourcing before making any decisions.

BPO companies can help take your business to the next level by freeing up time and resources so you can focus on your core competencies. However, it’s important to do your research and consider all the risks before signing a contract.

Famous examples of successful business process outsourcing

The fact is that business process outsourcing may seem like a brand-new idea, but it’s actually a part of your regular interactions with other businesses.

Here are some examples of well-known companies that outsource internal business functions.

Did you know that Google outsources the majority of its customer service? That’s right – when you call Google with a question about one of their products, chances are you’re speaking to a customer service representative in another country.

By outsourcing customer service, Google can focus on its core competencies – developing new products and services.

Like Google, Apple also outsources many of its customer service calls. In addition to this, Apple outsources the manufacturing of its products to Foxconn, a Taiwanese electronics company.

By outsourcing the manufacturing process, Apple can focus on product design and development, which is where it excels.

Microsoft is another company that outsources many of its customer service calls. However, Microsoft also outsources other functions, such as software testing.

By outsourcing software testing, Microsoft can focus on developing new products and features.

Other companies that outsource customer service functions include;

  • JP Morgan
  • Bank Of America
  • Capital One

Outsourced IT functions

Lyft is a ride-sharing company that relies heavily on technology. To keep its costs down, Lyft outsources many of its IT functions, such as website development and maintenance.

By outsourcing IT functions, Lyft can focus on its core competency – providing safe and reliable transportation.

Airbnb is an online platform that helps people find accommodations around the world. Like Lyft, Airbnb also outsources many of its IT functions.

By outsourcing IT functions, Airbnb can focus on its core competency – connecting people with unique travel experiences.

Netflix is a streaming service that offers TV shows, movies, and documentaries. Netflix outsources many of its IT functions, such as content delivery and customer support.

Other notable mentions include:

  • Slack
  • Dropbox
  • Zapier

Administrative functions

Would you have guessed one of the biggest companies in the world outsources their payroll processes? In fact, they’ve been doing it since the 1930s.

By outsourcing payroll, Unilever can focus on its core competencies – manufacturing and marketing consumer goods.

Like Unilever, P&G also outsources its payroll processes. In addition to this, P&G outsources many of its administrative functions, such as HR and accounting.

By outsourcing administrative functions, P&G can focus on its core competencies – developing and marketing consumer goods.

Fujitsu is a Japanese electronics company that outsources many of its administrative functions, such as HR and finance.

By outsourcing administrative functions, Fujitsu can focus on its core competency – developing and selling.

Other notable mentions include;

  • Nissan
  • Toyota
  • Honda

Finding the right BPO company for your business

We should now be more informed of what business process outsourcing is, and how a BPO company can benefit your business.

Here at Consumer Links, we are unique amongst BPO providers by intertwining the advantages of onshore and offshore BPO services.

How do we do this?

We are a UK-owned and run business. Our headquarters are in Greater Manchester, but our outsourced contact centre is situated in Durban, South Africa.

This enables our customers to partner with a BPO vendor governed by UK law, yet access the benefits of an overseas operation.

Not only this, our South African location is run on-site by a UK director to mitigate common BPO myths that you may have been challenging with previous third party vendors.

We handle both non-core and core business functions for small businesses and worldwide household names alike.

Whether it is the front office or back office operations you need assistance with, get in touch with our team today to see how we can benefit your operation.

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