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Online business process outsourcing (BPO), also known as Internet BPO or I-BPO, is a type of outsourcing where a service is delivered over the Internet using web applications as the principal delivery mechanism. The increased connectivity and widespread use of the Internet has impacted the types of operational processes that a company can consider outsourcing. Use of web-enabled applications allows real-time data processing and access even though the principals are in different physical locations.
Outsourcing was the traditional domain of the manufacturing industry. Manufacturers contracted the unskilled parts of its production process out to companies in foreign countries where labor and materials were less expensive. The company expected to save money by spending less on labor and materials and to be able to reallocate those savings to other parts of the business, achieving a level of economy that it could not realize if it was doing everything in-house.
As the Internet developed and worldwide connectivity reached a stability point that could support electronic commerce, it became feasible to outsource other sorts of business processes. In particular, the parts of company operations that are based on communications with customers, employees and vendors became targets for outsourcing. Most importantly, web-based application development flourished, using the Internet as an equalizer so users no longer have to install a local version of an application on their computer system. By using a web browser and accessing the Internet, any user anyplace in the world can access the same web application and enjoy the same interface experience.
Online BPO is a type of outsourcing where the service firm does its work for the client over the Internet using a web application. For example, a company that wants to outsource its website-based customer service functionality would look for an online BPO firm to manage the process. This might include installing a content management system on the website to manage the customer forums and the company information section. It might also include live chat capability, a trouble ticket system and an email support desk. The service firm manages the web application and also provides the service needed to interface with the customers on behalf of the client.
Another example of a common use of online BPO is seen in the healthcare industry. Healthcare companies typically outsource medical coding, which is the process of assigning billable codes to diagnosis and treatments so medical providers can request payment from different insurance companies or the government. Outsourcing this process can take place entirely over the Internet. The healthcare provider enters information on the medical case into a web-enabled database on its end, while the online BPO service provider accesses and codes the information in the same database using Internet connectivity from its location.