Business Process Outsourcing (BPO) is a business model where firms outsource part of their processes to third-party service providers. BPO increases a firm's productivity, cost saving, and helps the firm concentrate on its core competencies. With remote work, hybrid offices, and increasingly, freelancers becoming the norm, BPO has come into its own. Notably, it is a rapidly growing field with dramatic and explosive growth rate that in just one year has tripled from an estimated $92.5 billion in 2019 to $232.32 billion in 2020. Recent reports showed that 80% of business leaders worldwide will likely either maintain or increase their current level of spending on outsourcing.

BPO operations are primarily 'Front Office BPO' and 'Back Office BPO'. These are distinguished to help ensure that intelligent decisions can be made when it comes to outsourcing.

What is Front Office BPO?

Front Office BPO consists of all such activities that have a direct relation to customer interaction and are going to define the image of a company in a customer's mind. Some examples - responding to customer inquiries, technical support, live chat service management, lead generation in sales, management of social media, etc.

Almost half of business leaders outsource customer contact activities, according to a Deloitte survey from 2024. Why? To keep costs without losing quality. Companies can pay specialist providers for their services instead of hiring and training full-time employees in order to find solutions by using call centers, marketing firms, computer helpdesks, etc. Because specialist providers are in a better position to respond to customer requests, resolve the issues quickly and turn inquiries into repeat customers.

Customer activity provides the basis for expanding sales and reputation. Recovering from a bad experience with a professional customer service agent, and making a good pitch to generate expanded direct sales, these are the reasons front office activity is not cutting costs - it is consistently producing a professional customer experience.

In order to be front office professional you'll need people skills, effective communication, soft cultural awareness, problem solving and plenty of patience. These selling, and emotional intelligence skills are what you are expected to deliver.

What is Back Office BPO?

Back Office BPO are business processes of the company that have absolutely no customer interaction, but are absolutely necessary for the company to grow. Examples include accounting, payroll, human resources, IT support, legal, data entry, analytics, compliance management.

The majority of small and medium enterprises consider back office outsourcing as a cost effective tactic, without taking any deterioration on service quality. The trend in back office outsourcing is headed toward data science niched segments, legal process outsourcing and high-end IT services, according to a 2023 report from Clutch.

While they do not earn revenue in the traditional sense, they allow for seamless internal systems. A good example from outsourcing is bookkeeping or payroll, where there is a promise of accuracy and compliance, or IT service that is keeping systems operational with the least amount of down time.

Back office staff require technical expertise, accuracy, analytical skills, and a regulatory sense for industry. They need to ensure in-house efficiencies are maximized, and performance is error-free.

Distinctions of Front and Back Office BPOs

They both have purposes, but one is constructed for a different purpose than the other:

Customer Interaction: Front Office BPO is face-to-face, telephone, message, and social media direct customer interaction. Back Office BPO is data entry behind the scenes, HR, and IT.

Revenues Generation: Front Office functions generate revenues through sales and satisfaction of customers. Back Office functions enable operations but not revenues generation.

Time Sensitivity: Front Office operations are time-sensitive since they must react to information—customers require an immediate reaction. Back Office operations, like financial reporting or screening for compliance, are not time-sensitive but very precise. Measurement of Performance: Front Office is measured in customer satisfaction, speed of service, and conversion of sales. Back Office is measured in accuracy, efficiency, and cost saving.

Why Both Types of BPO are Crucial?

Both Back Office BPO and Front Office BPO are of the most utmost importance to business success. Front Office outsourcing helps a business maintain a professional, smooth image and customer loyalty. Back Office outsourcing keeps internal operations running smoothly, in compliance, and at a low cost. The true value of outsourcing is in knowing what to outsource. Companies need to examine internal capabilities, strategic objectives, and resource constraints to determine what to outsource. By doing so, they can reduce the cost of doing business, enhance flexibility, and focus more on innovation and growth.

Bottom Line-In the high-speed digital economy of the times, a good BPO strategy can make companies competitive, increase the size of companies, and survive.