The MacNair Travel Leadership Blog

Outsourcing is common with businesses, both small and large. What makes Business Process Outsourcing (BPO) different from typical outsourcing is that an entire non-core business process, rather than separate tasks, is outsourced to a third-party service provider – putting the provider in charge of an entire functional area of the business.

Typically, BPO is used as a cost-saving measure for non-critical processes that a company must perform, but do not depend upon to maintain their position in the marketplace. Some common outsourced business processes include:

• Front office: customer support, lead generation and telephone call centers.
• Back office: HR, accounting and travel management.

BPO is ideally suited to organizations that do not have the financial resources to establish and maintain entire in-house departments devoted to these non-core processes. While every solution has its own set of benefits and disadvantages, here are 4 key benefits to choosing a business process outsourcing provider.

During the company’s height of growth in the 1980s and 90s, GE’s famous CEO, Jack Welch, was asked what his secret was to running one of the largest companies in the world in a similar growth trajectory to that of a much smaller company, while simultaneously reducing GE’s underlying cost structure. His answer was remarkably simple.

He replied, “We realized that our back office, is someone else’s front office. That the non-crucial functions that are important to business execution can often be done by somebody else at a lower cost (not necessarily a lower spend) than we could on our own; and it could be done better.” And thus began one of the most valuable trends in business – the outsourcing of services functions to companies that specialize in those areas (please note this is not the same practice as offshoring).