Business process outsourcing

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Business Process Outsourcing (BPO) is the contracting of a specific business task, such as payroll, to a third-party service provider. Usually, BPO is implemented as a cost-saving measure for tasks that a company requires but does not depend upon to maintain its position in the marketplace. BPO is often divided into two categories: back office outsourcing, which includes internal business functions such as billing or purchasing, and front office outsourcing, which includes customer-related services such as marketing or tech support.

BPO that is contracted outside a company's own country is sometimes called offshore outsourcing. BPO that is contracted to a company's neighboring country is sometimes called nearshore outsourcing, and BPO that is contracted within the company's own country is sometimes called onshore outsourcing.<ref>http://searchcio.techtarget.com/sDefinition/0,,sid19_gci928308,00.html</ref>

The most common examples of BPO are call centers, human resources, accounting and payroll outsourcing.

Use of a BPO as opposed to an application service provider (ASP) usually also means that a certain amount of risk is transferred to the company that is running the process elements on behalf of the outsourcer. BPO includes the software, the process management, and the people to operate the service, while a typical ASP model includes only the provision of access to functionalities and features provided or 'served up' through the use of software, usually via web browser to the customer. BPO is a part of the Outsourcing Industry. It is dependent on Information Technology, hence it is also referred to as Information Technology Enabled Services or ITES. Knowledge Process Outsourcing, or Legal Process Outsourcing are some of the sub sets of Business Process Outsourcing.

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Industry Size

India has revenues of 6.4 billion USD<ref>http://www.businessworld.in/issue/web_exclusive04_12feb07.asp</ref> from offshore BPO and 36<ref>http://www.ibef.org/artdisplay.aspx?tdy=1&cat_id=60&art_id=9754</ref> billion USD from IT and total BPO. India thus has some 5-6 % share of the total BPO Industry, but a commanding 63% share of the offshore component. This 63% is a drop from the 70% offshore share that India enjoyed last year, despite the industry growing 38% in India last year, other locations like South Africa, the Philippines and Eastern Europe have emerged to take a share of the market. China too is trying to grow from a very small base in this industry, though the industry is expected to continue to grow in India. Its market share of the offshore piece is expected to reduce.

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