As businesses around the world embrace the gig economy, the global business process outsourcing (BPO) market continues to expand. Within one year, the global BPO market value expanded from $92.5 billion in 2019 to $232.32 billion in 2020 and is projected to continue rising through 2028.
Business Process Outsourcing is the practice of contracting non-core business processes and operations to third-party vendors. Typically, BPO involves the outsourcing of more routine processes, rather than essential functions.
There are two subtypes under the umbrella of BPO location-based BPO and process-based BPO. Location-based BPO includes onshore, nearshore, and offshore BPO while process-based BPO encompasses front office and back office BPO.
Workforce managers can strategically leverage both front office and back office BPO to increase revenue, minimize costs, and maintain productivity.
Front Office Business Process Outsourcing
Front office BPO refers to the outsourcing of client or customer-facing services to external businesses or third-party vendors.
These services include sales, marketing, customer service, tech support, and any business process requiring direct contact with customers. Because these functions are inherently client-facing, they can potentially impact both revenue generation and reputation.
When critical business processes are strategically divided among in-house and external workforces, the company benefits from access to specialized talent and reduced in-house expenses. To ensure that external workforces operate efficiently and follow company procedures, third-party vendors can be included to help manage them.
Back Office Business Process Outsourcing
Back office BPO refers to businesses contracting contingent workers for non-client-facing services. These include administration and support personnel in departments such as accounting, IT, supply chain, HR, internal communications, and more.
This form of outsourcing continues to branch out into other outsourcing subtypes, including IT-Enabled Services (ITES) Outsourcing, Legal Process Outsourcing (LPO), and Knowledge Process Outsourcing (KPO).
Many types of non-client-facing operations are frequently outsourced due to the technical knowledge required to perform a service. Paralegals, IT technicians, accountants, and more are examples of positions outsourced due to technical complexity and required expertise. Back office BPO provides businesses with access to valuable knowledge and skill sets that are not dependent on in-house infrastructure.
Advantages of Outsourcing
When it comes to BPO, businesses do not have to settle for either front or back-office strategies. Both forms of outsourcing can be utilized concurrently to produce a variety of advantages.
Reduced In-House Expenses
Businesses can reduce certain expenses, such as rent, equipment, etc. by operating off-site. In addition, some contractors will cover their own expenses for third-party applications and infrastructure required to complete their duties.
Greater Efficiency and Productivity
Some front office and back office vendors own everything they require to perform a service. Between efficient equipment and operational experience, contracted vendors are equipped to deliver enhanced productivity.
Ability to Reallocate Time and Resources
Without the burden of inefficient and expensive business processes, businesses are able to focus on their core business processes and mission.
Hiring and Managing Outsourced Personnel
While selecting which font and back-office processes to outsource may seem simple, identifying and managing vendors can be difficult. Partnering with a Managed Service Provider (MSP) as part of your contingent workforce management strategy can help minimize the burden on your HR and procurement teams.
At HCMWorks, we streamline the procurement and management of human capital so your business can focus on more critical business processes. Contact our team of contingent workforce experts to discover the difference an MSP can make in your business.