Introduction to Business Processes Outsourcing

A. About the Speaker: -

Mr. Abhinav Sabharwal conducted this session on “Introduction to Business Processes Outsourcing”. He is serving as Sr. Business Analyst at RPA         Infotech India Pvt Ltd. He is passionate about helping people to learn RPA skills. He has 13 years of overall experience in various domains like supply chain management, transport management, CRM &ERP implementation. He is well versed with various SDLC methodologies like waterfall, agile.


B. Business Process Outsourcing(BPO): -

  • BPO (business process outsourcing) is a business activity in which a company hires an outside service provider to complete a critical business task.
  • Typically, an organization begins by identifying a process that is required for its operations but not part of its core value proposition in the market; this phase necessitates a thorough understanding of the organization's processes as well as effective business process management.
  • Payroll and accounting processes, for example, are suitable for BPO since they are conducted the same or similarly from company to firm. Because these commodity operations don't usually distinguish one company from another, business leaders often decide that having their own employees conduct them isn't worth it.
  • Companies believe that outsourcing these procedures to a business that specializes in them will produce better outcomes.
  • The manufacturing industry is where BPO began. After determining that third-party vendors could contribute more skills, speed, and cost efficiency to that process than an in-house team could, manufacturers hired them to handle parts of their supply chains. Other industries eventually followed suit.
  • Organizations of many types — for-profit enterprises, nonprofits, and even government agencies — now contract with BPO service providers in the United States, throughout North America, and around the world to conduct a variety of tasks.


Cost-Benefit Analysis Decision | Outsourcing to India vs the USA

C. Use of BPO?

  • Business process outsourcing is used by companies for two types of tasks: back-office and front-office operations.
  • Accounting, information technology (IT) services, human resources (HR), quality assurance, and payment processing are examples of back-office tasks, sometimes known as internal business functions.
  • Front-office functions include customer relation services, marketing and sales.
  • In recent decades, the range of operations and services supplied by the business process outsourcing industry has substantially expanded for both large and small firms.


The following are examples of processes that are frequently outsourced:

  • accounting
  • administration
  • customer services and call centers
  • HR
  • IT management and services
  • manufacturing
  • marketing
  • research
  • sales
  • shipping and logistics


D. How BPO works?

  • For a variety of reasons, business executives choose to outsource a business process. These factors differ depending on the type of organization, its age and size, market pressures, and economic conditions.
  • Startup organizations, for example, frequently have to outsource back-office and front-office activities because they lack the means to establish the necessary workforce and support functions in-house.
  • An established company, on the other hand, may decide to outsource a work that it had been doing in-house after an analysis revealed that a third-party service provider could do the job better and at a lower cost.
  • Enterprise leaders are advised by management experts to identify functions that can be outsourced and then decide whether or not outsourcing that work to an outsourcing provider makes sense.
  • If this is the case, the company must go through the process of not just choosing the best vendor for the job, but also negotiating with them.


E. Benefits of BPO: -

  • Financial benefits:-

BPO providers can frequently cut the cost of a business process or save the organization money in other ways, such as tax savings.

  • Improved flexibility:-

BPO contracts can offer the ability to modify how an outsourced business process is done, enabling companies to react more nimbly to changing market dynamics.

  • Increased competitive advantage:-

BPO enables an organization to focus more of its resources on operations that distinguish it in the marketplace.

  • Higher quality and better performance:-

 Because business processes are their core business, BPO providers are well positioned to complete the work with greater accuracy, efficiency and speed.

  • Access to innovations in the business process:-

BPO providers are more likely to know about advances happening in the process areas they specialize in. That means they're more likely to invest in new technologies, such as automation, that can improve the speed, cost and/or quality of the work.

  • Expanded coverage:-

Organizations that need 24/7 call center operations can often quickly gain that capability by contracting with a BPO provider with around-the-clock capabilities and multiple geographic locations, enabling a follow-the-sun business model.


F. Risk

  • Breach of security:-

The technical link between the hiring firm and the BPO provider provides yet another access point for unscrupulous actors; additionally, corporations frequently share sensitive and/or regulated data with their service providers, posing still another security risk.

  • Unanticipated/higher costs:-

Organizations may underestimate the cost of outsourced work, either because they misjudged the amount of work to be done or because they miscalculated the total cost of their BPO contracts. 

  • Relationship challenges:-

Organizations may run into communication challenges with their outsourced suppliers, as well as cultural barriers, both of which could hinder BPO's benefits.

  • Increased potential for disruption:-

A company must also keep a watch out for scenarios that could result in the outsourced supplier's relationship being disrupted or permanently terminated. Financial or labour concerns at the outsourced supplier, geopolitical instability, natural disasters, or changes in the economy are just a few examples. As a result, businesses must consider such risks and devise strategies for coping with them, further complicating their business continuity and disaster recovery plans.


G. Types of BPO: -

  • Offshore outsourcing, or just offshoring, occurs when an organization contracts for services provided with a company in a foreign country.
  • Onshore outsourcing, or domestic outsourcing, happens when an organization contracts for services provided by a company that operates in the same country as the hiring organization.


H. Snapshots: -


I. Report By: -

Above report is written by Mr. Akshay Gopal the first-year student of Operations & Supply Chain Management department of ITM Business School, Kharghar, Navi Mumbai.