Business Process Outsourcing

By Dian Herdiana

Business process outsourcing used to be exclusively implemented by manufacturing firms but today, even service-oriented firms have been benefiting from them.

Business process outsourcing or BPO refers to activities or functions that are contracted to a third party to reduce costs, improve productivity and efficiency, and achieve greater innovation.

Types of Business Process Outsourcing Various functions of a business can be outsourced. What they are will depend on your company's strengths and weaknesses and its projected benefits.

Customer Relations Management
This is arguably the activity that's most commonly outsourced by both manufacturing and service-oriented firms. Indeed, a huge majority of the BPO industry is composed of call centers specifically tasked to handle customer relation needs of client firms.

Equipment
Rather than invest in equipment that they will only occasionally use, companies prefer to outsource their need for expensive equipment by renting them instead. Whereas outsourcing agreements are commonly long-term for customer relation activities, outsourcing equipment needs are commonly done on a per-project basis.

Finance and Accounting
In dynamic and highly competitive industries, companies need to focus more on product development and whatever aspect of their business that serves as their core competency. Because of this, the company has lesser time to concentrate on administrative functions like finance and accounting.

Most companies choose to outsource finance and accounting functions to continue devoting most of their attention in improving organizational strengths.

Human Resources
One of the best examples of outsourcing human resources activities is the Bank of America. For quite some time now, the well-known banking company has relied on Exult, a BPO human resource vendor, for all its HR needs.

HR management is not something that just about any manager can handle as it deals directly with people and all related issues. Recruitment, compensation, and performance evaluation are just some of the many key activities in HR that have direct impact on an organization's ability to achieve its goals.

Logistics refer to the management process of all materials and goods used and produced by the business. Typical functions making up a company's logistics include but aren't limited to product allocation, scheduling, and forecasting, inventory control, and order entry.

A small fashion designing business may choose to focus on designing products and then outsourcing its entire logistics needs to a BPO vendor that's well-versed and more experienced in handling such activities.

Supply Chain Management
Also known as SCM, this process involves the planning, implementation, and control of supply chain functions. Logistics is a part of supply chain management. Common problems in SCM include distribution network configuration, inventory management, integration of information, distribution strategizing, and cash flow management. For companies to enjoy success in outsourcing their SCM functions, they must be prepared to involve their partners in local and central activities to a certain extent.

Security
Finally, most companies nowadays choose to completely outsource their security needs, regardless of their preference for automated or human-managed security. Security is a highly specialized field. An advertisement firm would hardly know, for instance, what the best security measures are in cases of break-ins.

By outsourcing security needs to the appropriate BPO vendors, companies are rest assured that their assets are under strict protection of professionals. No longer having to worry about security concerns, companies may then concentrate more on other and pressing activities.

Business process outsourcing is not exclusive to big businesses and corporations. Your small business can benefit from BPO, too, if you know the right activities to outsource.