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Business process outsourcing (BPO) is the procedure of entrusting another company the task of managing business related activities of your company or organization. The companies to which such tasks are entrusted may be based in another country.

A company needing to bring their costs down, increase their revenue, increase the size of their business, achieve goals more efficiently and at a faster pace or provide clients with more efficient services, should consider outsourcing parts of their business tasks.

Before outsourcing is implemented, it is very important to identify the business activities that can be handed over to outsourcing service provides and the cost savings and efficiency that can be gained by outsourcing such business activities. The ability of the service provider to achieve targets affectively is also of utmost importance. It is necessary to study the efficiency of the service provider, evaluate more than one provider and once a satisfactory report is obtained about the quality of their services, negotiate with them to identify the company that would give you the optimum quality services with regard to cost, minimum error levels for the service done and timely delivery of the job.

It is important to have a written contract with the service provider showing details about the procedure of work to be done, procedure for delivering data to be processed, time allowed for the delivery of processed data, terms about errors in processed data and the processed data delivery procedures. The contract should also show the procedures for frequently checking if the terms in the contract are met as agreed. The payment terms and procedures are also to be shown on the contract as well as the penalty terms in case there is a deviation from the contract terms.

Risks exist in outsourcing. A company should identify such risks and built safeguards before implementing BPO processes. Risks includes decline in quality of service, delay in execution of processes, risk to security of your data and privacy & cost related risks.

It would always be good to have a test period to evaluate the efficiency of the provider before finalizing the deal with the provider. In order to have a service provider, with whom you can have a long term relationship, the initial evaluation phase is very important.

Core areas of the business is best done in house. The laws of the country in which your company is situated may require that the company comply to certain terms which would require you to plan your outsourcing strategy accordingly. Outsourcing should never affect the morale of your staff in a negative manner. The employees should be made aware of the benefits outsourcing should bring in and they should be assured that there is no risk to their jobs.

Wikipedia - Business process outsourcing

BPO - What is Business Process Outsourcing?
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