business-process outsourcing (BPO)
The outsourcing of a company’s entire business process to another company located domestically or in a foreign country. BPO is generally divided into two categories:
1) back-office outsourcing, and 2) front-office outsourcing. Back-office outsourcing includes internal business functions such as payroll, billing, and purchasing. Front-office outsourcing includes customer-related functions such as technical support, marketing, and sales.
Examples of business process outsourcing include:
A computer printer manufacturer outsourcing maintenance, repair, and stocking of replacement parts to a third-party logistics (3PL) company
A software maker outsourcing its entire customer support process to another company
A company outsourcing its payroll and human resources functions to an outside firm
Benefits of business-process outsourcing include:
Possible lower costs
The ability to concentrate in-house staff on core competencies
The ability to acquire specialized skills that would be difficult to replicate within an organization.