Business Process Outsourcing
Business process outsourcing used to be exclusively
implemented by manufacturing firms but today, even
service-oriented firms have been benefiting from them.
Business process outsourcing or BPO refers to
activities or functions that are contracted to a third
party to reduce costs, improve productivity and
efficiency, and achieve greater innovation.
Types of Business Process Outsourcing Various
functions of a business can be outsourced. What they
are will depend on your company’s strengths and
weaknesses and its projected benefits.
Customer Relations Management This is arguably the
activity that’s most commonly outsourced by both
manufacturing and service-oriented firms. Indeed, a
huge majority of the BPO industry is composed of call
centers specifically tasked to handle customer
relation needs of client firms.
Equipment Rather than invest in equipment that they
will only occasionally use, companies prefer to
outsource their need for expensive equipment by
renting them instead. Whereas outsourcing agreements
are commonly long-term for customer relation
activities, outsourcing equipment needs are commonly
done on a per-project basis.
Finance and Accounting In dynamic and highly
competitive industries, companies need to focus more
on product development and whatever aspect of their
business that serves as their core competency. Because
of this, the company has lesser time to concentrate on
administrative functions like finance and accounting.
Most companies choose to outsource finance and
accounting functions to continue devoting most of
their attention in improving organizational strengths.
Human Resources One of the best examples of
outsourcing human resources activities is the Bank of
America. For quite some time now, the well-known
banking company has relied on Exult, a BPO human
resource vendor, for all its HR needs.
HR management is not something that just about any
manager can handle as it deals directly with people
and all related issues. Recruitment, compensation, and
performance evaluation are just some of the many key
activities in HR that have direct impact on an
organization’s ability to achieve its goals.
Logistics Logistics refer to the management process of
all materials and goods used and produced by the
business. Typical functions making up a company’s
logistics include but aren’t limited to product
allocation, scheduling, and forecasting, inventory
control, and order entry.
A small fashion designing business may choose to focus
on designing products and then outsourcing its entire
logistics needs to a BPO vendor that’s well-versed and
more experienced in handling such activities.
Supply Chain Management Also known as SCM, this
process involves the planning, implementation, and
control of supply chain functions. Logistics is a part
of supply chain management. Common problems in SCM
include distribution network configuration, inventory
management, integration of information, distribution
strategizing, and cash flow management. For companies
to enjoy success in outsourcing their SCM functions,
they must be prepared to involve their partners in
local and central activities to a certain extent.
Security Finally, most companies nowadays choose to
completely outsource their security needs, regardless
of their preference for automated or human-managed
security. Security is a highly specialized field. An
advertisement firm would hardly know, for instance,
what the best security measures are in cases of
By outsourcing security needs to the appropriate BPO
vendors, companies are rest assured that their assets
are under strict protection of professionals. No
longer having to worry about security concerns,
companies may then concentrate more on other and
Business process outsourcing is not exclusive to big
businesses and corporations. Your small business can
benefit from BPO, too, if you know the right
activities to outsource.