The outsourcing of business process like payroll accounting or customer relation management to a professional service provider is known as ‘Business Process Outsourcing’. The service provider is called a BPO company which manages the assigned business process according to pre-defined measures of performance.

Outsourcing is basically a third party performance of specific functions. It relies upon a vendor to perform a vital business process on an on-going basis. It helps the management of an enterprise to concentrate on core-tasks and leave all non-core tasks to outsiders. Any activity in which a company lacks internal expertise can be outsourced. BPO is marked departure from the earlier practice of a business enterprise carrying out all its business operations and takes on its own. The business firms used to hire outside agencies only for such activities that came up occasionally as training of staff, advertising a product, etc. Routine and regular activities like after sales service, managing accounts receivables, maintaining books of accounts, etc, were carried out by business firm’s own staff. BPO consists of hiring out such routine and regular tasks to specialized agencies.

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