Business process outsourcing (BPO) contains the transmission of processes along with the related operational activities and responsibilities, to a third party with at least a guaranteed the same service level and where the client contains a firm grip over the (behavior of the) vendor for mutual long term success. BPO is positively associated to the search for more efficient organizational designs: cost decrease, productivity increase and innovative capabilities.
Normally, BPO is undertaken by developed firms. For example Coca Cola, where almost the total supply chain is outsourced and the company is essentially becoming a marketing organization. However, BPO is nowadays fast conquering the service oriented firms as well. A famous example is provided by the Bank of America, who outsourced their complete HR function to Exult, one of the important Human Resources BPO vendors.
BPO is often divided into two categories: Link Building Company back office outsourcing, which includes internal business functions such as billing or purchasing, and front office outsourcing, which includes customer-related services such as marketing or tech support. The endless opportunities IT provides, stimulates (cross-border) BPO activities. BPO that is contracted outside a company's own country is sometimes called offshore outsourcing. BPO that is contracted to a company's neighboring country is sometimes called near shore outsourcing, and BPO that is contracted within the company's own country is sometimes called onshore outsourcing. The most common examples of BPO are call centers, human resources, accounting and payroll outsourcing.
Use of a BPO as opposed to an application service provider (ASP) generally also means that a certain amount of risk is transferred to the company that is running the process elements on behalf of the outsourcer. BPO includes the software, the process management, and the people to work the service, as a typical ASP model includes only the provision of access to functionalities and features provided or 'served up' through the use of software, generally via web browser to the customer. BPO is a important part of the outsourcing industry. It is dependent on information technology; hence it is also referred to as information technology enabled services or ITES. Knowledge process outsourcing and legal process outsourcing are some of the subsets of business process outsourcing.
