Business Process Outsourcing Pt 1 of 3

Business Process Outsourcing Pt 1 of 3

7/24/2014 Umut Türker 1960 Times Read

I have said it before and I am saying it again: I love FreightArea.com and its blog.
I clicked on the tag of "Business" and read several wonderful, informative, useful and educational posts. They inspired me to write this post, in which I attempt to unite their ideas or themes.

 

But what is Business Process Outsourcing (BPO)? To paraphrase Wikipedia, BPO is the involvement of a third-party service provider in the operations and responsibilities of needed and desired business functions of a company.

 

Another website provides some types, categories or examples of the different needs of BPO. Such needs are human resources, accounting, payroll, call center and customer service activities, and others.

 

There is also the matter of geography. If the Business Process Outsourcing is contracted to another company within the same country (for example, if both companies are in the United States) then it is called onshore outsourcing. If the BPO is contracted to another company in a neighboring country (for example, if one company is in the United States and the other is in Canada) then it is called nearshore outsourcing. Finally, if the BPO is contracted to another company far away from it (for example, if one company is in the United States and the other is in the Philippines) then it is called offshore outsourcing.  

 

BPO is also known as ITES or Information Technology-Enabled Services as the services (such as accounting and payroll) are driven by information technology. Yet, BPO is distinct from IT outsourcing as the latter refers to website development, computer programming, software development, data center operations, quality assurance and others. IT outsourcing could be thought of as being "hardware" or the actual means or causes of doing something, while BPO may be thought of as being "software" or how to use those things.

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An offshoot of BPO is KPO or Knowledge Process Outsourcing. This seems to be becoming more and more in vogue, yet it requires greater education, expertise and managerial skill to handle.