Business Process Outsourcing (BPO) refers to the rearrangement of entire business functions to some other service providers, mainly in low cost locations on the globe. The service provider facility may be either self-owned or a third party. There are many perceptions and misconceptions about the business process outsourcing industry. There are a lot of myths as well that have little connection to actual ground realities.

BPO may include both IT related activities and business operations. Business operations include functions such as payroll, accounting, or billing to a third party. All these business processes may rely on IT but they are separate from hard-core IT operations like Call centre activities or Software Development. An important side of business process outsourcing is its ability to free corporate executives from some of their day-to-day process management responsibilities and concentrate on the core business of the organization.

Benefits achieved as a result of outsourcing are numerous. BPO add value to business. Business Process Outsourcing is important for optimizing business performance. There has been a tremendous upsurge in BPO and outsourcing industry in many developing countries.

BPO helps companies to focus on core areas. Companies generally outsource processes to reallocate accountability and control costs. Thus the management is in a better position to focus on core areas, and not keep itself engrossed in unproductive areas. Outsourcing also helps companies to avoid capital expenditures in non-core areas that may need new systems and up gradation. By and large, companies only want to spend money on core areas.

BPO contributes in reducing cost of service or manufacture as the case may be. BPO provides quantifiable benefits through improved efficiencies, lower overhead, reduced payroll and benefit expenses, and fewer capital investments. Other BPO benefits include assurance of best practices, skills, and technology. It is important to note that BPO provides access to proprietary workflow systems, process reengineering skills, and innovative staffing and delivery models, coupled with world-class technology delivered by experts.