Business Process Outsourcing is responsible for conducting a process or becoming part of the already occurring processes in some other business organization. Business process outsourcing saves additional costs and utilize them in increasing the productivity level of the organization.
There is an existence of different BPO organizations such as medical transcription agencies, which handle their businesses online and make phone calls in behalf of their clients and call center can also be considered as a BPO organization as well. The business processes are based on information technology and often referred to as ITES, BPO where ITES stands for Information Technology Enabled Service and legal process outsourcing (LPO).
Software on Demand
Software on Demand (Sod) is a type of IT process outsourcing. A Sod outsourcer provides the hardware for hosting the information and ensures their installation, updates and support. Sod has no ownership policy and prefers to rent out the services. So the customer does not have to pay large amount of money as it always have recurring payments.
Advantages of BPO
Outsourcing market is growing continuously in the past few years due to its various benefits:
Stay flexible and competitive
BPO plays an important part in increasing the flexibility of the organization. But different organizations have different ways of perceiving the organizational flexibility. The technological advances and changes in industry and the companies who outsource often look for the flexibility and provides quality control as well. Outsourcing business functions keeps your company flexible and reacts to market forces and conditions that are changing continuously.
Improvement of productivity
BPO makes it easier for the corporate executive to focus on the important business areas. It is because the executives spend more time in managing the details so they don’t get much time in formulating strategies. Due to the services provided by BPOs, it becomes easier for the upper management to formulate effective strategies and focus on their current customers. All of this results in the improvement of productivity, producing more skilled and educated professionals for performing all these tasks in an efficient manner which will eventually result in improving the productivity.
Proper utilization of resources
BPO allows the proper utilization of scarce resources. Outsourcing also helps in capturing new efficiencies and the proper utilization of resources. This helps in increasing the productivity and efficiency and also the availability of more skilled professionals.
Saving your money can be significant in any business. It not only helps in cost reduction but also increases its productivity and profit levels in a significant manner. BPOs can help for the improvements in process, utilizing the resources and latest technologies and re-engineering of the process as well. It can also help the organization in maintaining the low rates of company with the provision of better service solutions by making their market position better and allowing them to gain a competitive advantage as well. Companies which considers BPO providers saves up to 50% costs which means that there are always extra financial resources for carrying out the effective business operations and processes.
Improving the human resource
Improving the entire process of HR helps in serving as one of the greatest advantages of the outsourcing business processes. Man power plays an effective part in enhancing the importance of BPO. Now a days, most of the companies require efficient and productive human resource that can do the generation of economies of scale. Outsourcing provides an company’s access to the trained and skilled employees at low rates.
Emphasize on important business areas
An effective business strategy is required for flourishing the business. Outsourcing allows the top management level to hire third party for managing some important business related activities. This allows the top management level to improve the productivity and business operations.
Adjust with the changing business environments
There are many BPOs which provide the management with flexible customer service for meeting the changing requirements of customers and supporting the acquisitions of company along with joint ventures.
Latest technology challenges
Technology is a leading area of outsourcing. It allows us to make the work of modern organization comparatively easier. The investment in new technology is very costly and risky too and with the development of technology market, it can become increasingly difficult to cope with the current technology and innovations. Outsourcing to companies requires the resources, expertise and desire for updating the technology solutions.
Disadvantages of BPO
Along with many advantages and benefits there are also some of the drawbacks and risks associated with the business process outsourcing:
Risk is the major problem in business process outsourcing. Let us take an example, if you are outsourcing an information system it can cause security risks from both privacy perspective and communication aspect. However, some companies manage it successfully for the achievement of benefits in such a way that it will help in getting the positive results and minimizing threats with BCM (Business Continuing Model). BCM consists of many different steps for the identification and management of any type of typical business processes in an appropriate manner.
Pressures of technology
Business process outsourcing involves keeping up with any technological advancements and innovations. It requires you to stay updated with any type of technological changes that are happening in the market and improving your own business processes according to that.
Complexity is also one of main disadvantage of business process outsourcing as it is not an easy task to allow any outside contractor to handle the whole business processes.
Like every other business, BPO has its own advantages and disadvantages but overall the trend of outsourcing has increased in the past few years and it has turned out to be beneficial for the businesses.