Decoding BPO Industry

Decoding BPO Industry – Services offered and challenges

Which business doesn’t like to cut costs? For many, this means contracting out or outsource. Business Process Outsourcing or BPO industry is seen as the vehicle for reducing costs, increasing productivity and improving competitive agility.

BPO is the method of contracting out a non-core segment of a business to a third-party company that has expertise in the required domain. It acts as an effective and smart strategy for delegating certain business activities to external companies, which manage the assigned activity based on pre-defined, measurable performance outcomes.

Since technology has come to play a vital role in the sharing of data on the cloud and facilitating the transfer of products & services from one region to another, BPO is also known as Information Technology Enabled Services (ITES).

Among key BPO players, who hire the greatest number of BPO professionals, are Accenture, Capgemini, Genpact, IBM, TCS, IBM, etc. Genpact, established in 1997, was one of the major BPO companies of India, which made rapid progress as a trusted name in the industry. It expands to over 25 countries and over 100 companies have outsourced their processes to Genpact. Among its major services, Human Resource, Banking and Financial Services, Risk Management, and Aftermarket Services, are the most popular.

Quick Reasons – Why Companies Outsource?

Contracting out non-primary or non-core activities to a third-party company (either in the same region or overseas) gives following benefits to the companies:

  • Increase their operational efficiency
  • Gives them the bandwidth to focus on core competencies
  • Reduce time to market
  • Gives companies access to fresh talent and the latest tech at a lesser price
  • Strengthens company’s economic structure for the long run

Cheap labor, more productivity is one of the major reasons why outsourcing helps companies reduce their cost of operations.

Case in point, Philippines has recently been dubbed by executives as attractive geography for outsourcing customer interaction or call center activities. Reason? English speaking population, which can be hired at economical prices compared to any developed nation human capital. Similarly, India emerged as the leading provider of offshore business services in 2017 given financial attractiveness, skills availability, and business environment.

Human capital gives BPO industry its lure. Resorting to BPOs for human labor needs help companies to maximize revenues and get quality services at the same time.

BPO Services – By Type

By type of the products and services offered by the BPOs, it can be classified into six main segments. In each of these segments, BPO professionals with knowledge of relevant service are recruited. Different types of BPO services include:

  1. Finance and Accounting Services

It includes functions like billing, accounting, auditing, regulatory compliance, etc.

  1. Back Office Services

Back Office Services may include services ranging from payment processing, collection, direct and indirect procurement, logistics, transportation to warehouse management.

  1. IT and Software Operations

It includes technical support services, such as application development, testing of software, IT helpdesk, etc. Data entry operations also come under IT service type.

  1. Customer Interaction Services

Customer Interaction or call center services are one of the most popular services of BPOs, which include voicemail services, appointment schedules, email services, telemarketing, surveys, order processing, customer support, warranty administration, and customer feedback.

  1. Human Resource Services

Workforce challenges are also addressed by BPOs. HR services outsourced by companies involve, cover payroll services, healthcare administration of employees, training, insurance, retirement benefits, among others.

  1. Knowledge Process Outsourcing Services

KPO or Knowledge Process Outsourcing (KPO) goes beyond business process outsourcing to provide added value by offering knowledge-based services, such as data analytics, data mining, research, and developing programs.

BPO Industry challenges

The issue of data security is the most vulnerable point of BPO industry. The client firm always must provide information to the BPO service provider. This creates a potential point of leakage. In case the data ever is misused, it can be harmful to the client firm.

Another challenge facing the industry is automation, which is leading to a shrinking of business and the need for reinvention. The IT industry is building BPO applications run on AI. While it disrupts the industry, it also provides an opportunity to provide low-cost services via chatbots, routing calls, providing analytics, feedback on call performance, etc. Similarly, back office services can be automated for data entry, quality assurance workflows, HR and payment process workflows.

Growing competition demands continuous innovation! BPOs provide companies the breathing space to innovate by outsourcing their non-primary tasks, products, and services.



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