Economics/Business

What is BPO in simple meaning/Working/Solutions/implementation

BPO is a process or sector outsourcing strategy where the contracted company provides technology, experts and strategy in order to achieve the results determined by the contracting company. BPO in simple meaning

Creating a qualified team, agile in service and still solving customer pain while building a profitable business is not an easy task. 

That’s why BPO has been a widely adopted strategy by companies .

Through it, companies can focus on customers as secondary processes, which, although they are also important, are developed by third parties, increasing productivity.

One of the most palpable examples today is the hiring of accounting firms to handle all of the contractor’s financial issues. But we already said that BPO is not the same as outsourcing! 

What is BPO?

BPO is an acronym that comes from the English Business Process Outsourcing. BPO in simple meaning

In a nutshell, it is when a company hires another to carry out certain activities.

The market is increasingly competitive, this is nothing new for anyone and that is why management strategies such as the BPO have become increasingly relevant. 

It is no wonder that, according to an article published in the magazine Grand View Research , the global market for companies offering this type of service was estimated at around 232 billion dollars in 2020.

By outsourcing some processes or entire sectors such as HR or Finance , the contracting company can focus on delivering value to the customer while these activities are managed by teams of specialists.

The objective is always to increase productivity, reducing operating costs and risks for the business. 

Further on, we will discuss in depth the benefits of having this management strategy.

At this point, let’s talk a little more about how this concept came about and how it works in practice.

How did the BPO come about?

BPO emerged in the early 1990s and its focus was on outsourcing services, mainly transactional processes that did not rely much on human interference.

This migration still gained a great ally from the 2000s onwards with the acceleration of digital transformation in companies . BPO in simple meaning

Thus, processes that used to take hours of work to complete are now automated through third-party systems.

These advances allow these outsourcing companies to incorporate sophisticated process automation , demonstrating an evolution in the way companies are organizing themselves.

The history of BPO suggests that this type of outsourcing is only valid for back office services, however, this is a very wrong view. Business processes can also be transferred to other companies.

How BPO works in practice

When we think about the concept behind BPO, we soon see that the whole idea revolves around optimizing processes in order to increase the productivity of organizations.

Thus, the idea is that any process that is not the main activity can be outsourced by a service provider.

And this can work in two ways, allocating employees from the outsourced company to the company, or delegating completely, the second being the most common.

Have you managed to differentiate between BPO and normal outsourcing? They’re pretty similar concepts, aren’t they? How we know it can be complex is our next topic of discussion.

What is the difference between BPO and outsourcing?

We started this text saying that BPO and conventional outsourcing are different things, now you will understand why. BPO in simple meaning

When we think of outsourcing, we think of the delivery of a simple service and usually defined by the contracting party itself. 

It is common to see the term associated with cleaning, maintenance, security, etc.

We use this term “outsourcing” when talking about BPO strategy, but it is only borrowed. 

When a company provides a service through BPO, the expectation is that it will provide technology, strategic and technical knowledge and control the quality of its procedures according to a pre-established SLA.

In other words, the contracted company manages a part of the company’s operation and its deliveries must contribute to the company’s overall objective.

What are the main BPO solutions?

Now that the BPO concept is well established, let’s talk a little about the main areas that are outsourced. 

There are numerous solutions available on the market, but in this topic we will talk about the main ones and how they help your business.

Financial BPO

The financial BPO’s main function is to assist the company in its accounting tasks , including the dreaded tax management.

This is one of the most commonly outsourced areas due to the immense complexity of the sector. 

By having a team of subject matter experts, the chance of errors is much lower.

The contracted company performs all financial management such as accounts payable, receivable, document control, issuance of invoices, etc. BPO in simple meaning

In addition, a series of measures are also expected in order to optimize the entire sector and reduce the company’s costs.

BPO IT

The IT sector is increasingly indispensable within companies, however, creating this sector from scratch can be quite laborious and not generate the expected results for the company.

Thus, not only is the internal team leaner, but it is also possible to rely on the most innovative technologies for the sector, since specialized companies tend to be always updating and looking for more efficient alternatives.

HR BPO

As in the other sectors, the BPO responsible for HR takes over most of the processes in this sector, including the management of recruitment and selection and career planning .

This is one of the most bureaucratic activities of the organization and the support of a company that has the best tools is certainly of great help.

Also get to know Tangerino’s solution to optimize HR work with time control: All about time control .

BPO Legal and Compliance

Keeping a company within Brazilian laws is an arduous task, not only are they constantly changing, but they can also be quite confusing.

Therefore, once again, we emphasize the importance of having specialized professionals with a lot of experience in the area without creating a swelling in the company. BPO in simple meaning

In this way, the focus is on avoiding labor lawsuits and other legal issues that could affect your business.

Commercial BPO

The creation of business opportunities comes more naturally to those who are always working in this area.

Having a BPO in the commercial area is a great way to enhance operational processes in search of better results.

Administrative BPO

When a company wants to focus on managing people and the customer, it is common to outsource the administrative area, ensuring that all that bureaucracy gets out of the way of the company’s focus at that moment.

The benefits of implementing BPO in your company

It is already clear that the BPO strategy brings numerous advantages to the business, we will delve deeper into how this can be an excellent corporate decision.

cost reduction

The costs related to hiring and keeping employees can overwhelm a company, so relying on an outsourcing strategy, these costs are avoided.

In addition, there is also the entire learning curve for a new employee until he develops all the knowledge to fully perform in his position. BPO in simple meaning

But it doesn’t stop there, in addition to transferring these costs to the service provider, investments in technology are also avoided.

Of course, there is a payment made to the company, however, hiring the service is usually much cheaper than building an infrastructure from scratch.

Increased productivity

One of the great motivators of companies that really arrived in the 21st century is the optimization of processes, doing more in less time. BPO is an excellent way to achieve this goal.

In this way, the client (company that hires the service) is able to develop and focus its employees on the area of ​​interest

This leads to greater overall productivity as they are more focused on core activities.

In addition, the contracted company also needs to deliver the results expected by the contracting company and this is not usually a problem due to the know-how, technologies and experience.

Specialized services

Having specialized professionals with experience in their activities makes all the difference to the desired result. 

Without having a BPO, it would be necessary to hire these high-level collaborators in order to develop a productive team … and we already talked about the costs associated with this process.

This ensures that processes are being developed in accordance with the SLA and that legal criteria are being taken into account. BPO in simple meaning

Focus on standing out in the market

Navigating the competitive market we have today is not an easy task, especially for companies that are overloaded with their processes. 

Thus, taking the time to identify strategies to differentiate and grow ends up being sidelined.

So, not only can having a BPO be a great factor to bring in an outside view of the market, but also to literally buy time to dedicate yourself to what really matters at that moment.

The main disadvantages of BPO

Not everything is rosy and, before talking about how to apply this strategy in practice, it is important to understand that there are disadvantages when adopting this strategy.

Communication difficult

Especially when the service is not allocated within the company, communication can be a huge problem, so it is important to establish a process for exchanging information. BPO in simple meaning

Cost benefit

Not always having a complete solution is a real advantage, after all, these services can get expensive and fast. 

Thus, it is important to do a careful cost-benefit study before making a decision.

actions without control

Even delegating the processes, the company must be attentive to the projects being developed, after all, the intention is to forge a productive relationship.

How to apply the BPO strategy in practice

Ready to apply this strategy in your company? The first thing to do is to identify the company’s objectives to understand the most strategic area to outsource.

After that, keep in mind that you are hiring a service, so conducting an in-depth research on the reputation of all candidate companies is paramount. BPO in simple meaning

Another important point is to evaluate the company’s technical staff and also its values, after all, having specialists is one of the main reasons companies invest in the BPO strategy.

Also consult other companies in the segment and compare several values ​​​​before making a decision.

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