What is Business Process Outsourcing?

Very simply business process outsourcing can be seen as a process in which a company delegates some of its in-house operations/processes to a third party. Thus business process outsourcing is a transaction through which one company acquires services like software development outsourcing ect. from another while maintaining ownership and ultimate responsibility for the processes. The company then informs its provider what it wants and how it wants the work performed. So the company can authorize the provider to operate as well as redesign basic processes in order to ensure even greater cost and efficiency benefits.

The main motive for business process outsourcing is to allow the company to invest more time, money and human resources into core activities and building strategies, which fuel company growth.

In today’s business environment outsourcing is often not a decision that needs to be justified. In fact some work that is handled internally but could be outsourced can be seriously questioned as a bad business decision.

The global market today is highly competitive and continuously changing. A company must thus focus on improving productivity and at the same time cut down costs. Therefore, a lot of processes that take up precious time and resources are being outsourced. Business process outsourcing companies are often considered to provide more flexible, faster, cheaper and effective services.

Business process outsourcing helps free up a company’s capital and reduce costs. The operations or processes being outsourced vary from manufacturing to customer service to software development and much more. Most of the companies that are looking to outsource are multinationals, or companies from western countries and most of the BPO units are in countries such as India, China, Malaysia and even Russia.

One way of looking at it is that business process outsourcing is just a name for already existing practices. Services such as, bureau services, contract offshore software development and project management have been outsourced for a long time. In its present meaning, however, business process outsourcing refers to a greater level of handing over ownership and/or managerial control than has before been the case.

Companies turn to resources outside their organizational structure, usually to save money and/or make use of the skilled professionals. For instance, a company might outsource its IT management because it is cheaper to contract a third-party to do so than it would be to build its own in-house IT management team. Or a company could outsource all of its data storage needs because it is easier and cheaper than buying and maintaining its own data storage devices. A business might also outsource its human resource tasks to another enterprise instead of having its own dedicated human resources staff.
source: ExpertsFromIndia

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