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Answer Posted / hikaru ito
Business process outsourcing (BPO) is the act of giving a
third-party the responsibility of running what would
otherwise be an internal system or service. For instance,
an insurance company might outsource their claims
processing program or a bank might outsource their loan
processing system. Other common examples of BPO are call
centres and payroll outsourcing.
Typically, companies that are looking at business process
outsourcing are hoping to achieve cost savings by handing
the work to a third-party that can take advantage of
economies of scale by doing the same work for many
companies. Or perhaps the cost savings can be achieved
because labor costs are lower due to different costs of
living in different countries.
In exchange for the potential cost savings, the company in
question must relinquish control over an aspect of their
business which explains why business process outsourcing is
often reserved for non-critical, non-core type of work.
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