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Ravi owned Rainbow Kid, a brand that manufactured toys for children. As the business grew, he saw an increase in demand for resources and inefficiency with in-office responsibilities. He soon realized that the payment department was finding it difficult to deal with a large number of employees and huge transactions regularly. It was affecting other operations by taking away time from core business processes. So, Ravi hired a BPO and outsourced payroll responsibilities to save money and resources and invest more time into innovation and development.
BPO stands for Business Process Outsourcing, and payroll is just one important task that it regularly handles. Instead of operating an entire payroll department, organizations usually hire BPOs to manage payments. BPOs aren’t limited to handling payments and deal with a variety of operations. If we look at BPO meaning with example, we find that it streamlines core business processes for other organizations.
Every business can solve problems and adapt and adopt efficient ways to conduct daily operations if they think proactively. They must identify problems and come up with innovative solutions to be successful. But it’s not enough to react and fix problems only when they come up. Organizations need to be a step ahead. They need to continue to improve business processes so that they’re prepared to deal with problems even before they develop. It’s not enough to maintain a status-quo but also to improve and grow constantly. BPO examples can show us how they add value to a business while streamlining it.
Since, even today, the idea is a little fuzzy, we’ll discuss BPO meaning with example, the advantages of BPO and the types of BPO.
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What Is Business Process Outsourcing?
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Types Of BPO
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Type Of Service
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Advantages Of BPO
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Business Process Outsourcing Examples
What Is Business Process Outsourcing?
Business Process Outsourcing is a method of outsourcing various business processes to third-party vendors. An organization enters into a contract with another party to handle any and every process related to a specific business function. While initially adopted by manufacturing units and businesses like soft-drink producers who outsource a large segment of their supply chains, Business Process Outsourcing is now a common practice among all organizations across every industry.
Business Process Outsourcing mainly refers to outsourcing non-primary activities. A third-party contractor or service provider is hired so that outsourcing processes can increase productivity and efficiency and decrease business costs. A BPO example shows how it can handle both front and back-end operations. Some common activities of BPO include customer care, human resources, technical support and solutions, website, accounting and finance services.
With a good understanding of business processes and using strong business process management skills, an organization has to first identify the process that’s necessary for its operations but isn’t a part of the core value market proposition. As such processes don’t usually differentiate an organization from others, executives deem these less valuable for their staff to perform. A BPO example can show us that outsourcing such processes to an organization specializing in these processes delivers better results in meeting the bottom line target and achieving efficiency.
Types Of BPO
Although offshore outsourcing is most commonly associated with BPO, it can be classified into other types. Here are the four main types of BPO:
Offshore Outsourcing
Offshore outsourcing happens when an organization hires a firm located overseas to fulfill specific work requirements. If an American e-commerce platform hires back-end service providers like customer care in India, it’s offshore outsourcing.
Onshore Outsourcing
Onshore outsourcing is when an organization outsources work to a firm in its own country.
Nearshore Outsourcing
If an organization contracts with a firm from a neighboring country, it’s called nearshore outsourcing. A business from India outsourcing to Bangladesh is an example of nearshore outsourcing.
Process Automation From Software-as-a-Services (SaaS)
SaaS or process automation organizations are also classified as a type of outsourcing. Instead of outsourcing specific business processes, they outsource the software required to run the processes.
Type Of Service
Depending on the type of service being provided, there can be three types of BPO:
- Knowledge Process Outsourcing (KPO): KPO happens when a service provider is hired for their capacity to perform specific business functions or processes and to offer their expertise around the same.
- Legal Process Outsourcing (LPO): LPO can be classified as a type of KPO that strictly deals with specific legal services, ranging from performing legal research and drafting legal documents to offering advice.
- Research Process Outsourcing (RPO): RPO refers to functions related to research and analysis. It’s usually hired by marketing agencies, investment firms and biotech organizations.
Business Process Outsourcing is also known as IT-enabled services (ITES) to recognize that outsourcing can happen with an IT infrastructure.
Advantages Of BPO
Hey are some of the key advantages of BPO:
Financial Benefits
BPO firms often carry out processes at much lower costs than in-house departments, which helps in saving money for an organization, including taxes.
Improved Flexibility
BPOs enable organizations to react to shifting market dynamics easily; flexibly drafted agreements offer the option to modify the method of carrying out a business process.
Better Competitive Advantage
Businesses can focus on their resources and primary processes. They can work on establishing control and competitive advantage in a market by offering distinguished products and services.
Better Performance And Higher Quality
Business Process Outsourcing examples show us that third-party service providers can complete the work with greater efficiency, speed and accuracy, positively impacting a business’s core processes and functions.
Innovation In Business Processes
BPOs know about technology and process advances in the areas of their specialty. This lets them invest in new technologies before the rest and improve the cost, quality and speed of work.
Expanded Coverage
Organizations offering customer care services 24×7 can improve customer experience by outsourcing the work to a third party specializing in such services across multiple geographical locations.
To transfer in-house work to a BPO provider, an organization needs change management. The scope of work has to be identified before shifting a function outside as it affects business operations, workflow practices and employees.
Managers need to identify processes and workflows that will be impacted and adjust them to accommodate the outsourcing. They need to carefully identify the objectives behind outsourcing a process or function — whether it’s cost savings, quicker turnaround, better quality or managing payroll. Third-party providers must be selected based on who is best equipped to fulfill the responsibilities. The objective behind Business Process Outsourcing is the basis of contractual obligations, assessing performances and measuring success.
Business Process Outsourcing Examples
Business Process Outsourcing can play an important role in giving a business the edge that it’s missing. It supports process efficiency and offers the scope of unhindered growth. Here are some organizations that are now considered successful examples of Business Process Outsourcing:
Accenture Inc.
According to Forbes, Accenture is one of the top-ranked most valuable brands globally, with clients in more than 115 countries. It’s regarded as one of the best BPO organizations as well. Accenture owns verticals in the fields of technology, strategy, consulting, digital experience and operations. Their services are availed by organizations operating in various industries, including banking and insurance.
JP Morgan Chase & Co.
JP Morgan Chase & Co. is a global leader in financial services. It’s also one of the largest US banking institutions, with operations worldwide. Their Philippines Global Service Center (GSC) is considered to be one of the top BPO organizations. The GSC handles a variety of functions such as accounting, HR, project management and compliance. Organizations in the legal, insurance and finance industries avail services by JP Morgan & Chase Co.
Hewlett-Packard AP (Hong Kong) Ltd.
Another global leader among BPO services is Hewlett-Packard (HP). HP offers an array of business solutions to clients in software design, internet, data/cloud and businesses in the health, manufacturing and public sectors.
Outsourcing common, non-primary business functions to a third party or using third-party software for in-house processes are quite common tools used by modern businesses to find success. Managers should look into BPO meaning with example to get ideas on how to outsource or automate processes for the benefit of their businesses.
A BPO example can help you explore options and ideas related to process outsourcing and automation for driving growth and profit. By appointing specialists to take care of the non-primary processes of an organization, you can focus on developing business strategies to establish a competitive advantage in the market. And with a demand for jobs rising every day, BPO is here to stay.
Today, process outsourcing and automation are fundamental for efficient business processes and organizational growth. The Rise In An Organization pathway by Harappa aims to nurture your Thrive Skills. Foster trust for enhanced collaborations and carve a path for success. Learn the BLAST Framework to deal with challenges and cultivate a growth mindset and the Flywheel Effect to develop the consistency to efficiently complete tasks and continuously generate great outcomes. Our faculty will use brilliant visualizations and presentations for training, assess you regularly and offer recaps to refresh your memory. Sign up today!
Explore Harappa Diaries to learn more about topics such as Meaning of Legal Process Outsourcing, Examples of KPO, What is Value Chain Analysis and Types Of Business Process Management to classify problems and solve them efficiently.
