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Business Process Outsourcing - Business Process Outsourcing, or BPO for short, is the outsourcing of an entire business process like accounting, payroll, logistics, etc. Beyond the cost saving and efficiencies, a central benefit of business process outsourcing is that it frees up corporate resources, including scarce personal resources, to focus on the enterprise's core business or competency. As is well known, if business managers have to worry less about non-core functions, they can spend more time on core functions - that is, on functions that deliver real value to the enterprise. Freed from much of their day-to-day tactical responsibilities, they can devote more time and attention to matters affecting the enterprise's long-run business results, including corporate positioning, market penetration, and product development.
Gartner Dataquest had forecasted that business process outsourcing will continue to show strong growth despite the economic downturn. Worldwide, business process outsourcing has grown from $19 billion in the year 2000 to $23.4 billion in the year 2005, at a 14.4% compound annual growth rate. Of the various business process outsourcing areas, customer relationship management (CRM) is expected to undergo most rapid growth, projected at over 20% annually by the experts. Business Process Outsourcing has also made very strong inroads into the market for data entry, medical and legal transcriptions, medical billing, and insurance claim bills processing.
Companies that make use of these services have more advantages than are immediately obvious. Clearly, the price of using offshore labor is much cheaper. In many cases, the most expensive cost for a business will be the cost of human resources. However, other latent benefits exist as well. Offices that are less crowded are easier to maintain. Perhaps moving to a smaller office could decrease lease payments. The offshore business process outsourcing trend will gain more stream in the upcoming years. Currently business process outsourcing stands to compete with lower end service jobs, and high tech jobs such as programming. In future, most functions that can be abstracted to a service will follow the same path.
Thus one thing is for sure that whether somebody likes it or not, one has to live with the fact outsourcing is the call for the day and those who refuse to understand its potential are taking a huge risk of being outdone by their competitors. After all the purpose of every business is making more money and not doing charity. And money saved is money made.
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