BPO implies ‘contracting another service provider party’. Originally, outsourcing is another trend which is restructuring the business in a significant manner. It is that longterm contract which is given for contracting usually secondary (non-vital) and later some major activities or for profiting from the experience, expertise, efficiency or even investment of the third party specialists.

The characteristics of BPO are: 

• Acquiring all those services from outside which you have been performing yourself till now.
• Entrusting secondary (non-vital) business activities only. 
• Outsourcing of processes can be done to either affiliated or to a third party.

 Scope of Outsourcing: 

Four main elements are included in outsourcing – 

contract creation, contract research, contract marketing and information science.

Need for Outsourcing: 

Need for outsourcing and its advantages are –

1. Focusing on Attention – Freedom from looking after routine back-office operations enables the managers to focus more on the primary business. 

2. Quest for Excellence – BPO uses the necessary guidance and skills of another company after ascertaining the specialised work sphere, instead of recruiting and training employees. 

3. Cost Reduction – This is achieved through process improvement, reengineering and use of technology, which reduces administrative and other costs that are included. 

4. Growth through Alliance – Upon outsourcing the less-important processes, companies can pay attention towards sales growth, market share growth, development of new products/services, orientation towards new markets, customer services and their satisfaction. 

5. Encouragement to Economic Development – Employment opportunities and economic development is enhanced in the countries which have BPOs.

Concerns over Outsourcing are – 

1. Confidentiality – The outsourcing of information system is unable to maintain proper confidentiality and secrecy. 

2. Sweat Shopping – BPO focuses more on ‘activity skills’ rather than ‘thinking skills’ and provides transactions at a minimum rate, hence the countries having BPOs do not earn more. 

3. Ethical Concern – Countries having BPOs increase unethical activities including child labour, gender inequality, etc. 

4. Resentment in Home Countries – When production, growth, messages, etc. move out of the country, they are followed by an outflow of employment and job opportunities, that results in an increment of unemployment in the country.