HR Glossary

Business Process Outsourcing (BPO)

When one company hires another company also known as third party to operate and execute tasks of an entire department or segment of their business is known as business process outsourcing.
Initially, BPO practiced among manufacturers where smaller companied made small parts for bigger company that made end product and executed those parts into one whole. Soon, it spread to other industries and in today’s time BPO’s have become a vital part of a company’s growth plan.

BPO service can be of three types:

  • OFFSHORE: when the services are given to a company based in a foreign location.
  • ONSHORE: when the services are given to another company within the country or city.
  • NEARSHORE: when the services are given to neighborhood countries.

There are 2 areas where BPO is required the most:

  • Back office Functions: these are internal business practices like accounting, HR, payment processing, IT services and QA (quality assurance).
  • Front office functions: it includes customer relations, sales and marketing and so on.

There are three categories of BPO:

  • Knowledge process outsourcing (KPO): when a company not only hires a company to perform task for them but also welcome their expertise and put them into practice.
  • Legal process outsourcing (LPO): it is a legal service provider and performs drafting legal documents to research and giving advice.
  • Research process outsourcing (RPO): when a company does research and development for other companies which can be biotech, financial, marketing research or any other survey’s.