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Business Process Management Glossary

What is Business Process Outsourcing (BPO)?

Business Process Outsourcing (BPO) is the discipline of outsourcing entire business processes to external vendors.

Initially, BPO was for the most part exclusive to large manufacturing firms such as Coca-cola. These large organisations frequently outsource large segments of their supply chain. This allowed them to focus on the core business strategy.

Once you have a process-driven company with clear process architecture and well-defined processes, then you can decide which to make and which to buy. This makes outsourcing perfect for processes that offer no strategic value to your organisation.

Benefits of BPO

Therefore, the largest benefit of BPO is increasing corporate flexibility. Originally, organisations used this additional flexibility to reach peak cost-efficiency. However, today due to technological advancements this adaptability is mostly used to direct quality control and for time flexibility. Other benefits of BPO include increasing the speed of a process to meet a deadline, hiring outside of a business’s core competencies and can provide access to expertise and/or equipment that may not be needed further down the line.

Risks of BPO

Of course, when you are outsourcing a project you naturally have less control over the scenario which can create risks. Particularly when working with a company which is based in another country outsourcing in a structured manner, maximising positive outcome can be a real challenge.

To combat this threat, set up a business continuity management (BCM) model. BCM consists of a set of steps, to successfully identify, manage and control the outsourced processes.

Further Resources of Business Process Outsourcing (BPO):

Explore more about different process improvement terms in our BPM Glossary.