About the speaker: -
Mr. Bhawesh Shetty has more than 17 years of experience managing operations and contact centre teams in the fields of insurance, telecommunications, IT software and hardware, and healthcare. He is also a certified scrum master. He is currently working as a project manager at WIPRO.
What is BPO?
The practise of contracting out various company-related operations to outside suppliers is known as business process outsourcing (BPO). Large manufacturing organisations first used BPO to help with supply chain management. Today, BPO has expanded to incorporate a variety of industries, including services firms.
The difference between BPO and KPO :-
Routine or ancillary business operations are increasingly being outsourced. It entails entering into a contract with a third-party service provider regarding the duties and operations of business processes. Nearly all multinational corporations today have outsourced some or all of their business operations. Business process outsourcing (BPO), which offers services in marketing, human resources, customer assistance, technical support, etc., has grown significantly in significance over time.
A subset of BPO is knowledge process outsourcing, or KPO. Core functions are outsourced as part of KPO, which may or may not result in cost savings for the parent firm but undoubtedly adds value. When compared to BPOs, the processes that are outsourced to KPOs are typically more specialised and knowledge-based. The typical activities that are outsourced to KPOs include R&D, services for the capital and insurance markets, legal services, biotechnology, animation, and design, among others.
Why business is outsourced from developed to developing countries?
- Reduce Cost
- Maximise Profit
- Competitive price for the one who outsource as deelpoing countries wil have so many upcoming industries which are fighting for clients.
- Low operating cost
- Work quality
- Improved human skill set
- The company which is outsourcing can rather focus on their core business development by giving out some work outside.
Types of BPO : -
The two types of BPO are :-
- Front office BPO –
Marketing and technical assistance are examples of front-office services that are focused on the clients of the contracting company. The front office functions are the one in which the company have face to face connection with the customer which means direct interaction takes place so called the face of the company. The functions which are mainly included in Front office are marketing, selling, customer service, advisory services etc
- Back office BPO –
Back-office BPO include internal business operations like purchasing or billing. The backoffice functions are that which include functions that donot require any face to face contact with the client. For example a automobile manufacturing company will have a set of design engineers and workers who work in the warehouse to produce the car but will have no connection with the clients whatsoever. All the information regarding design is gathered by the front office staffs and transferred to them for any upgrading or changes.
Onshoring and Offshoring: -
Onshoring refers to the transfer of commercial operations to a cheaper place inside the country's boundaries. For example when a company outsource its operation from one state to another in the same country for some benefits like cheaper labour, better transport, nearness to port etc.
Whereas Offshoring means when a company outsource its operations from one country to another is called offshoring. For example when google outsource its operations to an Indian company like Accenture or Wipro its called offshoring.
Advantages and disadvantages of BPO: -
- Productivity improvement
- Improved HR
- Focus on core business
- Improved service level
- Reengineering business process
- Access to world class capabilities
- Higher quality with lower work cost
- Knowledge goes away from company as they outsource
- Poor quality control
- Restoring operations is complicated
- Lack of loyal employees
- Political and religious instability.