Outsourcing is the process by which an organization contracts with another individual or company to get some of its work done. Viewed this way, most organizations go for some kind or other of outsourcing. Generally it is non-core aspects of the business that are outsourced.
The firms that offer the services thus required are called service providers or third-party providers. Businesses may thus tie up with service providers for either individual processes or whole projects or operations.
Outsourcing can be divided into two broad categories. They are BPO and KPO. Let us examine how each differs.
In BPO (Business Process Outsourcing), a particular process task is outsourced. An example would be payroll. BPO work could be either back office related or front office work. By front office functions we mean customer oriented work like marketing, answering calls, technical support and so on, whereas internal work like billing and purchase come in the back office category.
Multimedia/ animation, book keeping, business consultancy, CAD/ CAM, call center, DTP, data entry, proof reading and editing, typesetting, handwriting services, marketing, medical billing and transcription, web design and development etc are all services that could be put under the BPO category.
As is evident from the description, BPO activities involve carrying out standardized processes for the client. KPO or Knowledge Process Outsourcing typically calls for work that needs higher levels of involvement from the worker. The worker has to employ advanced levels of research, analytical and technical skills and has to make decisions of a higher order than BPO work. Examples are pharmaceutical research and development, patent/ intellectual property research, animation and simulation. Data research and analysis, legal services, content writing and development and database development services. KPO industry is less older and mature than the BPO sector.
Apart from BPO and KPO, ITO or Information Technology Outsourcing is another major category. ITO is usually overseen by the CIO of an organization. However the CIO is often called in to manage BPO and KPO operations where no significant IT skills are involved. This is due to the expertise the CIOs would have developed in outsourcing negotiations.
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