What Is A BPO?

BPO is a very common term that we have heard off late. It basically stands for business process outsourcing. Business process is nothing but the back end operations in an organization. For example you have a bank. The front end staff will collect the money and cheques. However, there is a back end team that will do the transfer on the system. For example they will debit one account and correspondingly credit the other.

What is a BPO

What is a BPO

Almost all organizations have a back end team that manages the operation. I hope you have now understood what a back end process is. Similarly if the bank decides to outsource its back end operations to another country or another company it is called BPO or the business process outsourcing as we know it as better. This gives a clear explanation into what a BPO is. However, the concept is not as simple as it seems there are lot of issues and technicalities involved.

The main reason why the companies outsource their back end operations is that it is a cost effective process.  It will reduce your cost of operation. For example if you are in United States then you will have to pay one hundred dollar for a certain job. The same job if you outsource to a third world country like India for example you will be able to get the same job done for say about fifty dollars. Therefore you save fifty dollars at a go which is definitely a big money isn’t it? One country that has become a very popular choice for BPO’s is India. The simple reason being that there is a mass population of English speaking professionals who can also do the job very effectively.

These professionals are cheap to acquire compared to Europe and America. Nevertheless, it is expected that in the future Pakistan and Africa can become bigger threats to India’s BPO industry as they are training large group of young students in English. These students will be available at an even cheaper rate when compared to India. India has been the market leader in BPO since a long time. Nevertheless, in 2010 the BPO industry of India was surpassed by the small nation of Philippines as the largest outsourcing industry in the world.

The first company that outsourced its supply chain services to India was the Coco cola. Now we have a large number of companies who have started their outsourced services in India. The names include banks, insurance companies, IT majors you name it and you will get it. The back end operations that are generally or popularly outsourced are human resource, finance accounting and contact centres that are also known as call centres.

Even information technology and technical support are also highly outsourced. All these types of outsourcing are common to India. A lot of young professionals have made fortunes in this industry. Some also say that BPO is easy money that anyone can join. However, this is not true you need to prove yourself in order to reach higher levels in a BPO.

It might be that some BPO’s don’t have high standards for academics but many have a high standard of eligibility and performance set. When you join a BPO you might get a good chance to travel abroad for training. The exposure is huge and if you do the job well you can climb up the ladder very fast.

Well the fact remains that BPO industry depends completely on the other economies in the world. If the United States or the European nations face an economic crisis that will directly hit the job markets of the country that are popular for BPOs.

The attrition and pink slips can become common in the BPO sector leading to an economic crisis. This is what was exactly felt during the recession that the world faced some time back. No matter what the experts say the fact remains that BPO industry will continue to flourish. There will be some ups and downs like all other industry but in the near future the scene will not be very dull for sure.

I hope we have given a clear idea of what a BPO is and how it operates. The benefits and the disadvantages of the same have also been covered. In case you are planning to take a job in this sector then you will definitely find this write up of use. There are also KPOs (knowledge process outsourcing) and LPOs (legal process outsourcing) that we will discuss in the next articles

You can also hear this BPO explanation from one of our colleagues Nitesh in the following video

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