Business process outsourcing, or BPO, involves hiring a company of specialists to perform a task more efficiently than the parent company could. While the advantages of BPO are varied, they mostly fall into one of three categories: speed, quality and cost. In most cases, a BPO has all three over the company that hires them, mostly due to a specialization in a specific area. It isn’t uncommon for a large company to have a wide range of BPO vendors that all perform different specific tasks.
Using BPO vendors is common in many modern businesses. Even small companies will often have a BPO that handles specific tasks, such as payroll or accounting. Larger companies will outsource the production of basic parts and materials and some services like hiring workers or marketing. The process of outsourcing is so commonplace that totally self-contained businesses are becoming oddities.
There are several advantages of BPO that make it very appealing to companies. The three main areas of speed, quality and cost all come from the specialized nature of outsourcing companies. A typical BPO vendor does one thing to the exclusion of all others. For example, a BPO vendor that answers tech support calls for other companies only does that. It doesn’t make tech-based products, it doesn’t sell ads and it doesn’t do accounting.
The first of the main advantages of BPO is speed. Since the vendor only does the one thing, it will typically know the best way of accomplishing any goal related to that area. This means there is less discussion on process and more actual progress. This amounts to a faster turnover for the hiring company.
The next of the major advantages of BPO is quality. This also comes back to the BPO vendor’s specialization. Since the vendor has all the tools, equipment and personnel to do a certain specific job, that job is typically done very well. Since the workers’ training focuses on a specific area, and that's all they ever do, their experience is much greater than what would commonly be available in the client company.
Money makes up the last of the advantages of BPO. The former two reasons save money on a basic level, speeding up production and ensuring quality, but that is only part of the money-saving aspect. The client company saves money on hiring, training and maintaining staff that it may only need occasionally. In addition, since the client doesn’t have to focus on the outsourced areas, it makes it easier to stay focused on the main product line of the company, which improves its chance of success.