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 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 services, as well.

KEY TAKEAWAYS

• Business process outsourcing (BPO) utilizes third-party vendors or subcontractors to carry out certain parts of their business operations.
• BPO began with large manufacturing companies to aid with supply chain management, but today BPO has grown to include all sorts of sectors, including services companies.
• BPO will be considered "offshore outsourcing" if the vendor or subcontractor is located in a different country; for instance, in the case of customer support.

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.

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