There are two categories of business process outsourcing; back office and front office. In back office outsourcing, internal functions such as billing and purchasing are included. In front office outsourcing, marketing, customer services and technical support is included. There are many components of BPO such as software, people and management processes.

Business process outsourcing enhances the flexibility of an organization in different ways. Contractors which provide BPO services charge fee for their provided services. This fee can vary from company to company and it converts fixed costs into variable costs. Outsourcing increases resource management and decreases response time in environmental changes. A company can focus on its core competencies by outsourcing other business processes to a third party. It increases the speed of business processes and functions because the whole process is divided into smaller parts.

In Business process outsourcing you can focus on your strengths and outsource processes in which you are weak. The financial and human resources of the organization can be used in an effective and efficient manner. In BPO you don’t need to setup separate departments of your organization. You can outsource those functions which you cannot handle in your premises. It will save costs and will avoid complex structure of the company.

There are some disadvantages of business process outsourcing. BPO vendors can fail to provide satisfactory service level. The change in requirements can create contractual problems or increase in charges. If BPO fails to complete the task on time then the company has to suffer loss. When a company wants to outsource a business process then it should analyze all the requirements and past performances of the BPO vendor. The satisfaction of customers and competitiveness of the organization can suffer when BPO vendor fails to achieve the goal.

There is great risk in some business process outsourcing. When a company outsources its information system then there can be security risk for the company. The organization can lose its information and independence in the process of outsourcing. BPO is a different kind of relation between a company and its contractor in which costs of business process can be underestimated. An organization should manage all the threats and risks in the process of outsourcing to achieve desired results. The risks in BPO can be avoided if the nature of the business process which is being outsourced is analyzed carefully.

The contractual relationship between the organization and contractor is very important to complete the business process smoothly. If the contractor is providing quality work and satisfy the company then their relationship can prolong. Mostly complex business procedures are outsourced because in this way they can be completed in a better way. Outsourced business processes do not affect other processes in the organization. Once the experience of outsourcing is pleasant then companies mostly rely on outsourcing.

Business process outsourcing is a good technique to complete business functions competitively and efficiently. Before outsourcing to a contractor you need to know quality of its work, customer satisfaction and reduction in cost. In start you should outsource a small business process to get experience about BPO and its process.

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