We are no strangers to the fact that every business needs to innovate in order to continuously deliver optimal levels of service to their customers. As one of the many BPO companies in the world, we prioritize providing top-notch solutions and services to companies that need a helping hand. To make this possible, we make sure that the types of services we offer to our clients fit their goals.
Business Process Outsourcing is known for allowing companies to optimize their operations, save costs, and focus on their core business functions. But for a business to succeed with an outsourcing campaign, knowing the right type of BPO is crucial. You read that right. BPO involves many important facets, and before partnering with a BPO firm, you should have a basic knowledge of the various types of BPO services that fit your needs.
In this article, we will walk you through the different types of business process outsourcing services that BPO providers offer. Likewise, we will help you understand the different types and categories of BPO that will match specific business objectives. Read more and discover which categories of BPO services offered by external service providers you should consider.
What is Business Process Outsourcing?
Popularly known as “BPO”, BPO stands for Business Process Outsourcing. It refers to the practice of hiring a third-party vendor to work on various business functions. Outsourcing business functions to third-party service providers typically involves vital processes such as hiring and recruitment, training and skills development, tech acquisition, compensation, and performance assessment.
The global BPO industry was estimated to be valued at around US$ 318.8 billion in 2024. With a steady and robust CAGR of 8%, the global BPO industry is forecasted to reach 688.2 billion by 2034.
5 primary types of BPO Services that you should know:
Now, let’s explore the different types of BPO services that every business owner should know. We divided them into categories to help you distinguish their differences and pick the best BPO type for you.
BPO Types: Supply Chain & Services
1. Back-Office BPO
This type of BPO involves tapping an external provider to render back-office services that don’t require face-to-face interactions between the business and its customers. These services include accounting, business process automation, human resources, IT, and quality assurance.
The popularity of this type of outsourcing also paved the way to the emergence of various BPO subtypes like Legal Process Outsourcing (LPO) for paralegals or advisors, Knowledge Process Outsourcing (KPO) for specialized program management and implementation, Research Process Outsourcing (RPO) for business research and analysis, and Information Technology-Enabled Services (ITES) for IT analysts. Outsourcing legal services, tech, and financial services, and other non-core functions helps companies save money and work with the best professionals in each field.
2. Front-Office BPO
In contrast with back-office outsourcing, front-office BPO involves outsourcing front-office services to an external service provider. These services require frequent face-to-face interactions with customers and usually involve specific skill sets and expertise. Along with back-office outsourcing, this business process outsourcing type is also frequently outsourced due to technical knowledge requirements.
Front-office BPO usually covers functions like customer service, sales & marketing, and even tech support. Many call center vendors take pride in their 24/7 operations and cutting-edge technologies that help businesses access global talent at affordable rates. If your business is subject to changing levels of demand and peak seasons, outsourcing front-office functions like sales and customer care is highly recommended.
Types of BPO based on the location of the vendor
3. Offshore BPO
As the name suggests, offshore outsourcing is the process of relocating business processes from one country to another. For example, foreign companies may outsource their back-office operations to companies based in countries like India or the Philippines. Similarly, American retail companies might tap into outsourcing companies in China for production and manufacturing.
Offshore outsourcing or offshoring has grown tremendously due to its cost-saving benefits. When your outsourcing partner is based in countries with a lower cost of living, like the Philippines, this type of BPO can reduce your operational costs. Ecommerce companies worldwide are known for contracting Filipino contact center services to provide excellent round-the-clock support to customers around the world. That is a form of offshoring.
4. Nearshore BPO
This type of BPO involves tapping the help of a service provider based in a closer geographical location. For US companies, hiring BPO firms based in Mexico and Canada is considered nearshore outsourcing. Business owners who worry about a lack of control over their business and cultural differences usually prefer this type of outsourcing. Since the client and the vendor share a similar geographical location, miscommunication issues are rare.
Nearshore outsourcing, just like other BPO types, also allows companies to connect with competent individuals without investing in recruitment services and infrastructure. However, it is also important to note that the cost of living in neighboring regions could be similar. This means that outsourcing fees can be expensive as well.
5. Onshore BPO
Also called domestic BPO, this type of outsourcing refers to the process of outsourcing services within the same country and territory. Simply put, a company located in a specific city can hire the services of an outsourcing firm located in another city, province, or state. Onshore outsourcing is recommended for startup companies that are new to the outsourcing world.
The greatest advantage of onshore outsourcing is it keeps business owners at ease. Since they are located within the same nation, it’s easier for them to conduct site visits and participate in important phases of the outsourcing project. They can coordinate regularly with the outsourcing service provider, share insights, attend meetings, and even monitor the vetting process. By doing so, they can get the best people to do critical tasks and not compromise the organization’s product and service quality.
Advantages of BPO explained.
Working with a BPO partner will help you reduce expenditures.
When a company outsources some of its functions to a reliable BPO vendor, the service provider will be in charge of typically every cost needed to set up an external team. From recruitment and onboarding to training and compensation, business owners don’t need to worry about paying excessive fees just to maintain a competent team.
For example, outsourcing services like IT and contact center means letting your outsourcing partner pick the right people and the right technologies for you. This also means setting up the required infrastructure to ensure productivity. Companies that outsource business functions reported an impressive cost-savings of up to 70%, so don’t miss the opportunity to save time and money with outsourcing.
Outsourcing services to external providers helps you focus on core business functions.
This is especially true with back-office outsourcing. Doing mundane activities like administrative tasks can be time-consuming. But with the help of business process outsourcing companies, you can focus on your organization’s core functions that generate revenue and aid in the development of new products and services.
Moreover, you can be 100% at ease when outsourcing internal business functions to experienced industry professionals. Doing this will not only help you reduce costs or focus on core activities. This will also enhance the efficiency of both your internal and external teams.
You can expect seasoned industry professionals to deliver quality support services.
Outsourcing involves contracting services with the help of third-party firms located in different parts of the world. And when talking about the BPO sector, expect only the best. Because BPO focuses on helping businesses hire global talent, their selection process is known to be incredibly meticulous.
If you’re planning to outsource your customer support solutions, BPO companies can connect you with highly skilled and experienced call center agents and customer service representatives. These agents have mastered customer support strategies and etiquette that help businesses deliver top-notch levels of customer care.
Serving customers in different time zones and locations is easier.
The goal of BPO companies is to help businesses deliver optimal quality of services to all their customers. Most BPOs offer 24/7 call center operations, with the right team and facilities to accommodate every client’s needs. Apart from BPO call centers, back-office BPO companies also boast round-the-clock services.
Working with the right partner in BPO entails a higher capacity and ability to serve customers around the world. Wherever you are, you can be confident that your outsourced team will provide solid and continuous support to your customers. Round-the-clock services can also help reduce the influx of customer inquiries that need to be escalated.
You can scale your business up or down.
Outsourcing enables businesses to scale their operations depending on their needs, the needs of their customers, and how well the business is performing in the market. This means that as the business owner, you can decide whether it’s time to add new staff or reduce the manpower.
If the business is doing well, an additional workforce could be highly beneficial. But if there are problems with the performance of your external team, laying off staff could save the business from potential losses. Outsourcing companies offer plenty of flexible pricing models that will help businesses scale their operations better. Make sure to coordinate with your service provider for outsourcing terms that will be beneficial for you and your external team.
Diving into the known (yet manageable) disadvantages of BPO.
You might lose control over your business.
BPO means fully entrusting your business functions to your service provider. And one of the reasons why some business owners hesitate to outsource is control. Your outsourcing partner will be responsible for overseeing and managing each outsourcing campaign using their proven strategies for past clients.
However, in the corporate world, one effective strategy might not be effective for all. When things go south, it’s important to take control. It is a common dilemma among organizations that outsource when they are slowly losing control of their operations.
Technology in other outsourcing destinations needs further improvement.
While many BPO companies adopt the latest technologies to improve their outsourcing solutions, some outsourcing destinations still find this aspect challenging. From outdated equipment and problems with internet and telecommunication connections, tech issues can be a deal-breaker for some businesses.
This can be resolved by proper coordination with your outsourcing partner and making sure that reliable backups are available in case of technical problems. It is also advisable to consult an IT expert before starting an outsourcing campaign.
Communication barriers might affect productivity.
Basic conversations could only be good in a short-term project. But when complex issues arise, language barriers could be really problematic for both the in-house and outsourced teams. It is important to note that problems in communication could negatively impact the quality and efficiency of your business operations. Thus, addressing them beforehand is always the best decision.
Because communication is key, it’s always a must for organizations to ensure that culture and language barriers are properly handled. Some companies conduct language training and cultural immersion workshops to help their in-house and outsourced teams become more comfortable at work.
Privacy and confidentiality issues
Outsourcing certain tasks requires businesses to share important (and oftentimes very sensitive) data with their outsourcing partner. Without the proper confidentiality clauses and the appropriate technology to prevent data leakage, privacy and confidentiality issues could affect the trust between the client and its outsourcing provider.
Why is finding the right BPO model important?
Nothing beats the experience of working with an organization that matches your needs and goals. Finding the right BPO model is crucial because it allows you to identify the things that your business genuinely needs. With the availability of modern outsourcing solutions that optimize specific business functions, the right model will help you save costs and find the right people for your business activities.
Because you are only required to pay for particular functions, you can allocate a bigger portion of your budget to equally important areas of your business. Likewise, your resources will be more accessible, and optimization will be a lot easier.
Outsource call center and other essential business functions with a reliable service provider like Digital Minds BPO.
Learning about the different types of BPO is essential for you to pick the right services to outsource. Assessing and evaluating the current performance of your in-house team can help you decide whether outsourcing is the right business decision for you. With a reliable and experienced service provider like Digital Minds BPO, outsourcing can be fun and easy!
We offer a wide range of outsourcing solutions that will fit all your business needs and budget. From customer support services and telemarketing to content moderation and data entry, we’ve got you covered. Our friendly and competent all-Filipino teams will deliver all your outsourcing needs at a fraction of the cost. Get the most affordable BPO solutions without compromising quality. Contact us today, let’s discuss how we can help you build your dreams!
