Successful business owners and managers understand that being successful doesn’t necessarily mean doing everything yourself. As the demands of companies ranging from small mom and pop operations to massive international corporations grow more complicated, it can become highly expensive or even impossible to accomplish everything your business needs with in-house departments. Moreover, the more tangled your managerial infrastructure becomes, the harder it is to steer your ship. That’s where business process outsourcing (BPO) comes in.
BPO first got its start in the manufacturing industry. By splitting up parts of their operations among different companies, companies are able to create a segmented supply chain. That means that you can get the best deal on each component of your process and outsource specialized work to the people who are best equipped to accomplish it. But BPO has extended well beyond the manufacturing world, and today it’s practiced by everyone from non-profits to government agencies.
The amount of BPO services a company can use in the modern day are vast and varied, but most of them fall under the purview of back office or front office functions. The former covers the internal aspects of your company like human resources, accounting, or quality assurance, and they allow you to put your necessary infrastructure in place without having to build a whole department from scratch. Perhaps the most commonly incorporated back office function is payment processing. Front office services tend to cover relationships with your clients through functions like marketing, sales, and customer service. Cloud technologies have made BPO services significantly more accessible than ever before, and that has a major part to play in the rapid growth of the industry. In 2017, BPO businesses saw a revenue of $144.9 billion.
There are a number of benefits to BPO, but it also comes with some downsides. The financial benefits are obvious, but relying on a contract with a BPO provider also means that you can adapt flexibly to your company’s needs without having to fundamentally restructure one of your own departments. And since you’re devoting less resources to services that aren’t a part of your core business model, you can focus on the work your company does best. That said, BPO brings a couple of new challenges to the table. Rather than guiding these services internally, you’ll have to navigate the culture and language of BPO partners, and this can be especially difficult when you offshore your BPO. Security breaches can also be an issue, and a BPO partner that fails will leave you having to deal with the fallout.