Business Process Outsourcing (BPO):

• When a company hands over its business activities (or processes) on a contractual basis to another company it is called Business Process Outsourcing (BPO). For example, a company would outsource the work of call centre or data entry to reduce its expenditure.
• Outsourcing has become quite popular in recent years because human resource is available at very low rates in populated countries like India and China. Several foreign companies set-up their call centers in these countries to provide sales, after sales, online technical assistance to their customers.

Need of BPO:

• Cost-cutting: To save infrastructure set-up and other costs companies outsource their activities like billing, data entry, marketing survey, etc.
• Focus on principal activities of company: By outsourcing some activities the senior level employees and managers can focus properly on the core activities of the business.
• Benefit of efficiency: By outsourcing to a professional company a business can take benefit of the rich experience and efficiency a professional unit possess. If might be quite difficult or even impossible for the business firm to carry out such outsourced work on its own with such efficiency and expertise.
• To cater the dynamic demand: As a nation develops, expectations and demands of customers keep on increasing and changing. It may not be possible to meet the expectations and demands and so it becomes important to outsource some tasks to BPO who can handle such tasks. For example, in olden days companies did not have a large customer-care ‘ centre which now has become quite important with increased sales through online shopping and expanded market.
• Increased benefits: Business units can outsource few works to their subordinates in order to focus more on important activities like increasing sales, developing new products, expanding business and to serve and satisfy their customers better and thus increase the profits.

Scope of BPO:
The extent to which a company can outsource its work can be classified into two categories. They are:

1. Back-office outsourcing: A company can outsource its back-office works like billing, purchase, data entry, etc.
2. Front-office outsourcing: This includes customer services like sales and marketing, technical assistance, etc.