Business Process Outsourcing (BPO) definition

Business Process Outsourcing (BPO) is a generic term that involves hiring another company to take responsibility for a set of business activities or a single function. Processes typically outsourced will be non-mission-critical, such as payroll and benefits management, although the possibilities are expanding. Customer services, in the form of call centres, are often out-sourced to a dedicated firm.

Because BPO often depends on necessary technology/infrastructure that allows external companies to efficiently perform the role, it’s frequently referred to as information technology-enabled services (ITES).

BPO is often called ‘offshoring’ when the company taking over responsibility for a function is located abroad.

A related term is business transformation outsourcing (BTO), where businesses bring in specialist outsiders to help improve processes and make the firm overall more efficient, profitable and successful.

Knowledge Process Outsourcing (KPO) is another related discipline that covers process less able to be automated – payroll, for example, is able to be outsourced because the appropriate software automation is available, whereas talent management would be more challenging because it requires greater human intervention and knowledge of the company.