BPO, or Business Process Outsourcing, literally means entrusting certain aspects of your business to an external provider. Although of English origin, this term is widely used, even in French.
In practice, a company turns to BPO when it delegates part of its operations to another specialized company. This can cover a wide range of areas such as: IT, marketing, customer relationship management, accounting, manufacturing, data management, workflow management, and much more.
This article is a comprehensive guide on BPO: definition, types, advantages, disadvantages, and future perspectives. Hold on, let's start with the definition of BPO.
The definition of Business Process Outsourcing
Business Process Outsourcing refers to the delegation of one or more internal business processes to an external company. It is an English term, where "Business" translates to "Affaire," "Process" means "processus," and "Outsourcing" signifies "externalisation." In other words, it is the outsourcing of business processes. However, to facilitate communication, the acronym BPO is more commonly used than its French counterpart, EPA, which could also illustrate this meaning.
The most important word in BPO is l’outsourcing which means outsourcing. So outsourcing is the act of working with another company to handle part of a business's activities. This other company is an external service provider and is referred to as an outsourcing company or subcontractor.
Outsourcing business processes is unique to each company. For example, a smartphone manufacturing company may delegate its customer relationship management to another company. Thus, the company is engaging in BPO for its customer service by entrusting a business process to another company.
At that point, if customers call or send messages to the smartphone manufacturing company, the outsourcing company responds and does everything possible to resolve the customers' issues.
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Les différents types du Business Process Outsourcing
In reality, there are only two types of Business Process Outsourcing. They are : BPO back-office et le BPO front-office. However, both are still composed of several activities that are different from each other. For example, BPO related to accounting is different from BPO concerning human resources. Yet, both are considered back-office BPO. Similarly, Business Process Outsourcing for telemarketing is different from the’externalisation des processus du service client, even though both are front-office BPO. Let’s take a closer look at all of this.
Back-office BPO: outsourcing of internal services
Back-office BPO involves the outsourcing of internal processes of the company's internal affairs. As the name suggests, these are the affairs behind the office. This mainly concerns management, accounting, and various administrative tasks. Here are some tasks in the context of Back-office Business Process Outsourcing :
- Human resource management;
- L’administration d’un site internet ;
- Data management;
- VAT declaration and payment processing management;
- Quality control;
- Programming, etc.
BPO front-office: Outsourcing of customer relations
Front-Office BPO is simply the opposite of Back-Office. It involves outsourcing tasks that require interaction with customers.Front-Office Business Process Outsourcing encompasses sales, prospecting, or support. Below are some examples of tasks related to Front-Office BPO:
- All tasks related to customer service: after-sales service, complaint or refund management, technical support...
- Sales and marketing promotion;
- Surveys; prospecting...
The major benefits of process outsourcing
BPO offers economic advantages and increased efficiency in the long term..Here are some details on the benefits of Business Process Outsourcing :
- Significant cost reduction : The main advantage of Business Process Outsourcing is the reduction of business costs. When you delegate a task to another company, you don’t have to worry about equipment and human resources. Furthermore, you can target outsourcing to countries where business costs are significantly lower than the average. For example, for customer service BPO, Madagascar is generally more affordable than any other country in the world.
- Unconstrained scalability : Another major advantage of BPO is unconstrained scalability. If you wish to increase your external workforce, you simply need to place an order. You can scale at the pace of your business.
- Access to expert analysis : Indeed, the expertise of an outsourcing company is a significant advantage in BPO. Their skills are applied to your business, and you can analyze and learn from them if possible.
- Compliance and security : Professionalism is also an advantage of BPO. Typically, a subcontractor or outsourcing company operates with a clearly defined process established by you or by them.
The risks and drawbacks of Business Process Outsourcing :
Although BPO offers significant advantages, there are still risks and drawbacks associated with outsourcing. In fact, the biggest risk of Business Process Outsourcing is fraud .It is possible for a company to lack any real expertise in outsourcing but to confidently offer its services. Once they receive your upfront payment, they may disappear.
The consequences can be detrimental to your business, leading to financial loss, and even worse, it can impact your processes. To mitigate this risk, we recommend engaging with a certified company in its field. For example, in customer service outsourcing, we advise working with a call center that has ISO 18295 certification l’outsourcing du service client, nous vous conseillons de travailler avec un centre d’appel ayant la certification ISO 18295.
Be cautious about commitments in the contract; it is always advisable to opt for a short-term contract to start, such as three or six months, and then you can decide to continue if the BPO meets your expectations.
Key figures and the future of Business Process Outsourcing
Here are some figures that represent the past and future of BPO :
- In 2018, North America led the market with a 69% share in business process outsourcing services, followed by Europe (16.2%) and Asia-Pacific (9.3%).
- In 2020, North America maintained its leading position with over 36% market share.
- Between 2019 and 2024, Europe is expected to hold a significant market share.
- By 2030, the global BPO market is expected to reach 381.62 billion USD, with a compound annual growth rate (CAGR) of 9.6%.
In summary
BPO, or Business Process Outsourcing, refers to theoutsourcing of business processes. Some also refer to it as business processes, and that's not incorrect, as it includes activities and, therefore, a business.
There are two types of BPO: front office and back office. A company can choose to engage in offshore, onshore, or nearshore BPO based on its preferences.
Business Process Outsourcing offers advantages such as cost reduction and scalability without constraints.
However, the risks associated with fraud are also present. To avoid these, it is essential to choose certified outsourcing companies.
The BPO market is constantly evolving, which is one reason why you should also consider outsourcing some of your internal operations.
In the case of customer service, we recommend a certified call center. Call Solution is here for that; feel free to check out our client testimonials and schedule a free appointment. call solution est présent pour cela, n’hésitez pas à regarder les témoignages de nos clients et de réserver un rendez-vous gratuit .