business process outsourcing (BPO)

Organizations engage in business process outsourcing for two main areas of work: back-office functions and front-office functions.

Back-office functions, sometimes called internal business functions, include accounting, information technology (IT) services, human resources (HR), quality assurance and payment processing.

Front-office functions include customer relation services, marketing and sales.

BPO contracts can involve outsourcing an entire functional area, such as the HR department, to a single vendor. Organizations also often outsource specific processes within a functional area. For example, an organization may outsource its payroll process but perform all other HR processes itself.

Commonly outsourced processes include the following:

• accounting
• administration
• customer services and call centers
• HR
• IT management and services
• manufacturing
• marketing
• research
• sales
• shipping and logistics

A survey from Clutch, a business-to-business research firm, found that small businesses most commonly outsourced their more technical tasks, with 37% outsourcing accounting, 37% outsourcing IT services and 34% outsourcing digital marketing.

For large and small businesses, the range of functions and services offered The breadth of BPO functions spans from the conventional back- and front-office functions listed above to digital services, such as social media marketing.

In addition to these commodity functions, some companies also outsource strategic tasks, such as data mining and data analytics, both of which have emerged as essential elements for maintaining a competitive advantage in a digital economy.