BUSINESS PROCESS OUTSOURCING
Back to GlossaryDefinition
Contracting standard business processes to third-party providers to reduce cost or improve focus.
Summary
Business Process Outsourcing (BPO) is when a company hires an external organization to handle specific business functions that are typically done in-house. Think of it like hiring a professional cleaning service instead of having your own cleaning staff - you're letting specialists handle routine tasks so you can focus on what your business does best. Common BPO services include customer service, accounting, human resources, and data entry. Companies choose BPO to save money, access specialized expertise, or free up resources to focus on their core business activities.
Usage Context
Understanding BPO is crucial when studying business strategy, operations management, and cost optimization. It's particularly important when analyzing make-vs-buy decisions, studying global business practices, and evaluating organizational structure and efficiency.
Common Confusions
- Thinking BPO is the same as simply hiring contractors or freelancers
- Confusing BPO with offshoring - BPO can be domestic or international
- Believing that all business processes can or should be outsourced
- Assuming BPO always means lower quality or less control
- Mixing up BPO with technology outsourcing or manufacturing outsourcing
