Business Outsourcing: The Cost Effective Way To Get It Done

Business process outsourcing (BPO) management has traditionally been used by manufacturing companies. It involves buying in business function services from a third party company to run parts of the business in totality, while the manufacturer concentrates on doing what they do best i.e. producing their product.

However, business outsourcing is now used by many industries and sectors — not just manufacturing — to provide a range of functions and services. BPO is normally classified on the basis of either back-office outsourcing such as invoicing and supply management, or front-office solutions that involve customer-facing solutions such as marketing, customer call centres and technology support provision.

The primary business reasons for using outsourcing are economic and logistic. For example, to set up an entire call centre to deal with customer technical support enquiries would be astronomical, whereas training staff that already possess advanced technological skills in an existing third party call centre is a far cheaper option. It would also take much longer to set up a call centre from scratch and get it operational to a point where it could effectively handle customer queries; the lead times to establish such a process would probably result in the loss of an opportunity to deliver a particular product or service.

BPO doesn’t have to involve companies operating in the same country. Outsourcing to third parties operating outside the market of the contracting company — such as UK companies contracting their services to other European countries, or the Indian sub-continent — is known as offshore outsourcing.

However, unlike using an application service provider which involves the provision of a service to staff within the contracting company, business process outsourcing management involves handing the entire process to a third party for which they will assume an element of responsibility. The BPO organisation will provide the infrastructure to operate the contracted services, including all necessary technology and staff requirements. What’s more, the contracting company hands the BPO organisation the brief and then simply gets on with their core business.

Mainstream services such as marketing including the provision of sales and marketing materials, financial services and many other services vital to the effective running of a business can now be outsourced. Indeed, this can be performed with a high degree of confidence that they will be completed professionally.

Of course, many companies — including large multi-national companies — now outsource aspects of their day-to-day business processing, allowing them to get on with the natural running of the organisation. And they are not alone in adopting such a strategy.

Paul McIndoe writes for a digital marketing agency. This article has been commissioned by a client of said agency. This article is not designed to promote, but should be considered professional content.