Business Process Outsourcing
The term “business process outsourcing” refers to contracting with a third party to have them perform a business function. The word outsourcing is included as BPO entails hiring a third party.
Why Outsource Business Processes?
The idea is to eliminate work that is a distraction for the business. This can free up the business to focus on core revenue-generating work or to develop new lines of business.
BPO has the potential to solve many problems that plague businesses and hold them back. This can be a key component of a well-planned growth strategy. It can also be part of a transition strategy.
What Kind of Work Can Be Outsourced?
The type of work that can be outsourced varies considerably. For businesses that depend on repeat interactions with clients to sell high-dollar items, the critical work that usually cannot be outsourced are the client-facing jobs. For businesses that have more volume-based or lower dollar client interactions, even the client-facing jobs can be outsourced.
Work that can be outsourced also includes work that can be handled better by a specialist or a company that has a specific focus. In this sense, BPO is similar to a business hiring an expert, such as a specialized attorney, to handle a project. The attorney may be able to get the job done quicker, cheaper, and with a better outcome.
BPO is best for recurring work. Common examples of work include the business payroll function or even outsourcing the accounting or legal functions. It may include the marketing and human resource functions. It may even include the treasury and IT functions. These are all functions that have to be performed but are often not the functions that generate revenue for the business.
Where BPO Fits in the Financial Planning Process
As part of our financial planning, we often look for work that can be outsourced to help clients achieve their goals. We also help clients find the most qualified partners who are the right fit for the business. As part of this, we can often help negotiate the terms of the BPO and structure the role of the BPO.