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Increasing competition and vagaries of economy have made outsourcing a necessity for modern businesses. They may partly outsource their business processes or collaborate with a provider for full spectrum of services. Established BPO companies provide innovative solutions backed by state-of-the-art technology. Business Process Outsourcing (BPO) is the process of letting out business activities. It involves the outsourcing of the specific business functions to a competent third-party service provider. The term was originally associated with manufacturing firms that outsourced segments of their supply chain.
In the contemporary context, BPO indicates back office outsourcing that includes internal business functions such as finance, accounting, front office, human resource, customer care and many more services. A top BPO service provider may offer cross industry horizontal solutions like Human Resources Outsourcing, Finance & Accounting Outsourcing, Knowledge Process Outsourcing, Technical Support Services, Customer Relationship Management and Supply Chain Management (SCM). They may also focus on key industry services such as Health Care Services, Financial Services, Public Services, Telecom, Energy & Utility, Logistics, Retail & CPG, Media & Publishing and Manufacturing.
A new form of business process outsourcing is Transformational BPO involving multi-process outsourcing and full process. It is a holistic business services model to effectively address the evolving requirements and expectations of clients across the world. Companies would leverage their IT skills to provide customers the benefits of complete outsourcing. Corporate outsourcing deals usually involve multi-year contracts that can run into hundreds of millions of dollars. Often, the people performing the job internally for the client company are transferred and become regular employees for the service provider. They oversee or work with their existing staff regarding the business process.
Knowledge Process Outsourcing (KPO) is a subset of BPO involving activities that require greater skill, education and expertise. For instance, when a company outsources data entry, it is business process outsourcing. However, when it lets out work like analysis and evaluation based on a set of criteria or business rules, it would require the efforts of a more knowledgeable and experienced staff. KPO may include Research & Development (R&D), Product Development, etc. Legal Process Outsourcing (LPO) involves services such as legal research and writing, document review, providing patent services and drafting of pleadings and briefs. It consists of various processes that can be classified into low skilled (legal coding, corporate secretarial services, litigation support, data entry, etc.) or high end qualitative tasks (patent search and application drafting, legal research, intellectual property rights, etc.).
Business process outsourcing is not an option but a compulsion in the global world. In intense competitive scenario, it has become imperative for companies that the talent pools across the regions are utilized. Cost efficiency is another major factor behind business process outsourcing to diverse places often located offshore. Companies that follow collaborative, partnership based approach are better to outsource. They follow risk/reward based, flexible business models offering innovative, improvement-led solutions. A competent business process outsourcing company will enhance its services with strong human resources, thriving technology infrastructure, customized training program and a transition framework. Operational model they deliver is the key for customer satisfaction and cost reduction. Their team is an integral part of the client firms regular services.
A leading vendor like getsix® will provide operations, technology and infrastructure integrated services that culminates in tangible benefits like higher appreciation of business criticality, reduced process duration, micro level operational details, etc.
BPO services are generally categorised into horizontal and vertical services. These have been explained below:
1. Horizontal BPO:
Horizontal BPO involves function centric outsourcing. The vendor specialises in carrying out particular functions across different industry domains. Examples of horizontal BPO are outsourcing in procurement, payroll processing, HR, facilities management and similar functions. getsix® focuses on providing services in horizontal functions such as payroll, HR, benefit administration, tax solutions, etc. However, according to Gartner, companies should focus on providing vertical services as the market matures.
2. Vertical BPO:
A vertical BPO focuses on proving various functional services in a limited number of industry domains. Healthcare, financial services, manufacturing and retail are examples of vertical BPO domains.
Table 1: Horizontal and Vertical BPO
BPO horizontals are function-specific and could spread across different industry domains. Our Business Process Outsourcing Solutions are examples of horizontal BPO.
