what is business process outsourcing bpo 
business process outsourcing bpo is a method of subcontracting various business related operations to third party vendors although bpo originally applied solely to manufacturing entities such as soft drink manufacturers that outsourced large segments of their supply chains bpo now applies to the outsourcing of various products and services understanding business process outsourcing bpo many businesses from small startups to large companies opt to outsource processes as new and innovative services are increasingly available in today s ever changing highly competitive business climate broadly speaking companies adopt bpo practices in the two main areas of back office and front office operations back office bpo refers to a company contracting its core business support operations such as accounting payment processing it services human resources regulatory compliance and quality assurance to outside professionals who ensure the business runs smoothly by contrast front office bpo tasks commonly include customer related services such as tech support sales and marketing special considerations the breadth of a business bpo options depends on whether it contracts its operations within or outside the borders of its home country bpo is deemed offshore outsourcing if the contract is sent to another country where there is political stability lower labor costs and or tax savings a u s company using an offshore bpo vendor in singapore is one such example of offshore outsourcing bpo is referred to as nearshore outsourcing if the job is contracted to a neighboring country such would be the case if a u s company partnered with a bpo vendor located in canada a third option known as onshore outsourcing or domestic sourcing occurs when bpo is contracted within the company s own country even if its vendor partners are located in different cities or states bpo is often referred to as information technology enabled services ites because it relies on technology infrastructure that enables external companies to efficiently perform their roles the attraction of bpocompanies are often drawn to bpo because it affords them greater operational flexibility by outsourcing non core and administrative functions companies can reallocate time and resources to core competencies like customer relations and product leadership which ultimately results in advantages over competing businesses in their industry bpo offers businesses access to innovative technological resources that they might not otherwise have exposure to bpo partners and companies constantly strive to improve their processes by adopting the most recent technologies and practices since the u s corporate income tax is among the highest in the developed world american companies benefit from outsourcing operations to countries with lower income taxes and cheaper labor forces as viable cost reduction measures bpo also offers companies the benefits of quick and accurate reporting improved productivity and the ability to swiftly reassign its resources when necessary some disadvantages of bpowhile there are many advantages of bpo there are also disadvantages a business that outsources its business processes may be prone to data breaches or have communication issues that delay project completion and such businesses may underestimate the running costs of bpo providers another disadvantage could be customer backlash against outsourcing if they perceive this to be of inferior quality or at the expense of domestic employment business process outsourcing is a fast growing sector of the economy which makes it attractive as a career path or startup opportunity according to industry research the bpo market was valued at nearly 250 billion in 2021 and is projected to grow at 9 per year over the next decade 1according to data from zip recruiter bpo jobs in america pay an average of 91 100 as of 2022 2