What is Business Process Outsourcing?

- Business process outsourcing, or BPO, is the practice of contracting out certain

business operations or processes to a third-party company. Most of the time,
companies that work with a BPO partner chooses to outsource Non-Core or Non-
Differentiating Processes. This means that the processes are not a key part of
the company's competitive advantage or its mission. These processes may
include Administrative Tasks, Customer Service, Data Entry, Payroll, and other
functions that are necessary for the business to run but are not directly related to
its main product or service. This can help cut costs, improve efficiency, and get
access to specialized knowledge that the organization may not have.

BPO is divided into TWO main types of services:

1. Back office operations

- BPO is commonly used to outsource non-core functions or processes, such as
accounting, data entry, or human resources. By outsourcing these functions or
processes to a BPO provider, organizations can save costs, improve efficiency,
and access specialized expertise to support their back office operations.

2. Front office operations

- BPO is commonly used to support customer service and support functions, such
as call center operations, technical support, or customer care. By outsourcing
these functions or processes to a BPO provider, organizations can improve the
quality and effectiveness of their customer service and support, and drive
organizational success.

In general, back office operations are administrative or support functions that are not
directly related to the organization's core business, while front office operations are
customer-facing functions that are directly related to the organization's core business.

Why is BPO a Specialized Industry?

- The different audit and accounting considerations and trends, makes BPO a
Specialized Industry. BPO has a Special Economic Zone Act that provides tax
incentives, exemptions, and other privileges to foreign investors, along with that
are the following:
 Income tax holiday or corporate income tax exemption for four to eight
years
 Option to pay a 5% gross income tax in place of all national and local
taxes after the tax holiday.
 Tax-free and duty-free import of capital equipment, spare parts, supplies,
and raw materials
 Permanent resident status for foreign investors (and their immediate
family members) with an initial investment of US$150,000.
Relevant statistics and Updates of BPO in the Philippine Setting

1. 2016 – At an actual growth rate of 17%, the BPO industry is projected to

generate 1.3 million new jobs.

2. 2020 - Investment pledges for January to July 2020 are 37-percent higher
compared to the same period in 2019. According to UNESCO, the Philippines
has an average of 98.2-percent literacy rate — 98.2% for females and 98.1% for
males. There are 788 BPO companies composed of large and SMEs, according
to PEZA.

3. Effects of COVID-19

o Before the lockdown, 40% of workers are already working from home.
o 22% of employees continue to work from the office. The government ordered
BPO companies to provide accommodation, shuttle, and meals to employees
who work on-site.
o 18% of IBPAP member companies are looking at the option to retrench some
of their employees.
o 36% of IBPAP member companies do not expect any growth while 3% to 7%
are still expecting some growth
o Enforced community quarantines, which restrict people from going outside
their homes, boost the growth of e-commerce-industries, financial services,
and logistics

Business Process Outsourcing across Industries

 Healthcare Industry- BPO is often used to outsource non-core functions or

processes, such as billing and collections, claims processing, or data entry. For
example, a healthcare provider may use a BPO provider to handle the billing and
collections for their patients. The BPO provider would handle tasks such as
generating invoices, following up on unpaid bills, and negotiating payment plans
or discounts.

 Banking And Financial Services Industry - BPO is often used to outsource

functions such as loan processing, credit scoring, or fraud detection In the
banking and financial services industry, BPO is often used to outsource functions
such as loan processing, credit scoring, or fraud detection.
  Retail Industry- BPO is often used to outsource functions such as warehousing
and fulfilment, inventory management, or customer service. This can help to
improve the efficiency and reliability of the organization's supply chain, and
provide better support to customers.

 Manufacturing Industry, BPO is often used to outsource functions such as

engineering, design, or prototyping. This can help to access specialized expertise
and support the development of new products and technologies.

 Legal Industry- BPO is often used to outsource functions such as document

review, contract management, or legal research. For example, a law firm may
use a BPO provider to handle the document review for a large litigation case.
The BPO provider would handle tasks such as reviewing, coding, and organizing
the documents, and providing summaries or other forms of analysis.

 Logistics And Transportation Industry - BPO is often used to outsource functions

such as transportation management, fleet management, or warehousing and
fulfilment.

 Education Industry- BPO is often used to outsource functions such as student

recruitment, admissions, or financial aid.

 Public Sector- BPO is often used to outsource functions such as tax collection,
social services, or voter registration.

Overall, there are many examples of BPO in different industries and sectors, where it is
used to outsource a wide range of business functions or processes. By leveraging the
capabilities of BPO, organizations can save costs, improve efficiency, and access
specialized expertise to support their operations and drive organizational success.