What is BPO?
Business Process Outsourcing (BPO) consists of sourcing out business processes to third-party partners or vendors. BPO is usually related to the outsourcing of both front and back-office functions such as human resources, customer care, finance and accounting, data entry, healthcare, IT services, sales and marketing, healthcare, insurance, and much more. While the companies, which vary from startups to large enterprises, focus on core functions, the contracted partner, who has all the necessary resources and technology, takes care of getting done the outsourced functions. Although BPO-related processes are often considered time-consuming and even boring, they are essential to the company. Therefore, the vendor should provide value and help the seller to grow and stay ahead of the competition.
How did it Start?
Given the nature of the industry that allows businesses to cut distances and fill gaps thanks to the use of technology, the latter has an essential role in this thriving industry. However, BPO dates back to the days when the internet and computers had no major role in economic development.
During its first days, BPO was closely related to the manufacturing sector. Indeed, what we nowadays witness as one of the fastest-growing industries has its roots in the manufacturing sector. Soft drink manufacturers such as Coca-Cola hired other companies in the Philippines (one of the largest outsourcing destinations in the world) that could handle some processes of their supply chains that were not related to core functions. The lesson that others learned from this case, which dates back to the roaring 20s, is that outsourcing helped to cut costs and increase presence in international markets.
From the call centers to the cloud
Many companies started to apply this business strategy while the growing role of technology had a major impact on the segment. The evolution of ICT sub-sectors, internet connectivity, and infrastructure have shaped the BPO industry as we see it now. BPO evolved from call centers that depended on the telephone to advanced business solutions that depend on modern tech solutions such as the cloud and virtualization. Enterprises and companies of all sizes are always searching for the newest software that can help them to improve employee performance and boost customer care.
On the other hand, IT besides being a complement to the BPO industry can help to optimize the industry. Thus BPO will change from the traditional call center that employs a small segment of the population with basic computing skills and foreign language fluency to a tech-savvy sector focused on analytics and big data. Thanks to the new tech trends, the BPO industry along with cost-effectiveness will provide additional value and transform business models.