Business process outsourcing (BPO) is an outsourcing tactic in which a company sub-contracts its non-core activities to another company for services that it holds competitive advantage. Firms have been investing in many areas but only a few of these areas are of competitive advantage to them.
Such firms would spend much of their resources on all these areas while only a handful of them are of competitive significance. You can browse online to know about back office outsourcing services in Canada.
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The BPO concept shows these companies that it is only sensible to focus on the processes that it has competitive advantage. BPO implements specialization in that it encourages businesses to maximally indulge in activities that are of economic worth and leave the rest to other concerned parties. In a company's structure, there are three main segments in which business processes can be divided into:
• Core processes – Refers to the process of immense importance for the company and a significant competitive.
• Non-core, critical processes – This is an important process which has no competitive significance.
• Non-core, non-critical processes – the process is only required by the company because they are essential for the business environment to flourish.
BPO has two main categories:
· Home office outsourcing: Mainly includes customer-related services such as technical support.
· Back office outsourcing: Deals with internal business functions such as purchasing.
Apart from the above mentioned categories, BPO can also be categorized into onshore, near shore and offshore outsourcing. Onshore Outsourcing refers to businesses that have contracted the domestic companies.