What is business process outsourcing?

Business process outsourcing (or “BPO”) is the management - under a service level agreement (or “SLA”) that details the terms of the outsourcing relationship (including defined and measurable performance metrics) - by a qualified third party of one or more specific business processes or functions (e.g., finance and accounting, human resources, legal services, procurement, logistics, asset or property management, customer services, etc.), together with the information technology that supports the process or function, for a business customer (often, a group that includes a parent company, its subsidiaries and/or affiliates).

Differentiated from information technology outsourcing (or “ITO”) (which typically focuses mainly on the IT component of business operations, such as data center and desktop operations, and provides shared back-office support to a number of unrelated business functions, departments or entities), BPO focuses on how an overall process or function is run, from manager to end-user, rather than on the technology that supports such a process or function. For the customer, BPO allows it to focus on its core competencies, while the third party service provider focuses on and adds value to noncore processes or functions.