Business Process Outsourcing (BPO) Definition

What is Business Process Outsourcing?

Business Process Outsourcing, more commonly referred to as simply BPO, is defined b Gartner as “the delegation of one or more IT-intensive business processes to an external provider that, in turn, owns, administrator, and manages the selected processes based on defined and measurable performance metrics.” Essentially, it’s the outsourcing of both critical and non-critical business functions, including customer experience, content moderation, back-of-house automation, customer returns, etc.

BPO offerings are categorized into two major categories: horizontal offerings (those that can be leveraged across specific industries) and vertical-specific offerings (those that demand specific industry vertical process knowledge).

Processes that are performed the same or similar from company to company, such as payroll or accounting, are candidates for BPO.

Because these commodity processes don’t generally differentiate one organization from another, enterprise executives often determine there’s little value in having their own staff perform them. Indeed, companies calculate that outsourcing these processes to a company specializing in these processes could deliver better results.

How does Business Process Outsourcing benefit you?

It allows you to outsource functions to external vendors who have performed those functions for dozens to hundreds of other companies, so you’re outsourcing to expertise and allowing your internal staff to work on higher-priority projects instead of constantly managing logistics and putting out fires. The goal is to increase productivity and reduce costs. In the best-case BPO scenario, your third-party partnership becomes so rooted in trust that your vendor agents can offer your main company advice on sales strategy, marketing campaigns, product launches, and more. This can feel odd to discuss at first but makes perfect sense. If a third-party BPO agent is talking to your customers all week, he or she has more knowledge about your offerings and how customers perceive them than almost anyone. Lean on them for advice about the next strategic steps. That’s a best-case scenario, but even if you don’t get a trusted strategic partner, BPO is a huge play for efficiency.