Business process outsourcing basics:

Business process outsourcing (BPO) contains the transmission of processes along with the associated operational activities and responsibilities, to a third party with at least a guaranteed equal service level and where the client contains a firm grip over the (activities of the) vendor for mutual long term success. BPO is positively related to the search for more efficient organizational designs: cost reduction, productivity growth and innovative capabilities. Hence, a source for strategic advantage.
In the early days, BPO usually consisted of outsourcing processes such as payroll. Then it grew to include employee benefits management. Now it encompasses a number of functions that are considered "non-core" to the primary business strategy.
Traditionally, BPO is undertaken by manufacturing firms. However, BPO is nowadays rapidly conquering the service oriented firms as well. A well-known example is provided by the Bank of America, who outsourced their entire HR function to Exult, one of the leading Human Resources BPO vendors.
Business process outsourcing is fast becoming the best option of most large-scale companies and businesses. Outsourcing is defined as the process of delegating a certain task or business operation to a third party provider instead of having it done inside the company or institution. If the job is passed on to another country, it becomes offshore outsourcing. Companies engage in offshore outsourcing to further cut the estimated production costs. Although this concept looks good from a vintage point, the problems of business process outsourcing are worth analyzing first
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.
• Front Office Outsourcing : which includes customer-related services such as marketing or tech support.
offshore outsourcing: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.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 and legal process outsourcing are some of the subsets of business process outsourcing.s