Companies outsource various functions for all kinds of reasons. The most common reasons are to reduce and control operating costs, move from a fixed cost to a variable cost model, improve company focus, gain access to world-class capabilities, and free internal resources for other purposes, in that order. BPO also provides start-up companies with a much quicker time to market. Successful BPO requires three acts: 1) selecting the right activities to outsource, 2) identifying the right supplier to provide the services, and 3) ensuring the right governance approach for the relationship.

The targeted business processes generally fall into the areas defined below:

1. Human resources - payroll, benefits administration, education, and training.
2. Logistics/distribution - procurement, transportation, warehouse management, and material management.
3. Sales, marketing, and customer service - telesales and marketing, database marketing, Web sales, and marketing.
4. Payment services - credit/debt card processing or check processing.
5. Finance/accounting - accounts payable/receivable management, risk management, and general accounting.
6. Administration - tax processing, claims processing, and document management.
7. Manufacturing - design, production and component inventory management
8. Information Technology - application development and maintenance, desktop support and helpdesk support.

• CFO who are looking at every option to further cut costs
• IT Executives under pressure to reduce costs and improve quality
• Human Resources executives seeking lower transaction processing costs
• Finance and Accounting executives considering new processing options
• Customer Care executives building the next-generation virtual global contact center
• Sourcing executives with cost cutting and offshore mandates
• Shared Services executives looking to leverage an offshore advantage
• Outsourcing Providers seeking new ways to reduce cost and improve services
• Venture Capital Firms targeting the IT and IT-enabled services markets
• Consultants working with clients to develop and implement an BPO strategy

• Most of the back-office infrastructures of large firms were built for a previous era - preglobalization, pre-Internet, and pre-M&A. They must change quickly to meet the need for economies of scale and higher competition. For the large firm, the benefit of BPO is access to best practices, which in turn enables improved efficiency and substantial cost savings.
• BPO makes sense in a fast-moving world where management attention needs to be on critical operational processes and where management talent is scarce. Doing fewer things well and delegating what's non-core externally is strategically crucial. Back-offices, while important, are largely non-core.
• Corporations are ready for BPO. They understand traditional outsourcing and are more comfortable embarking on more complex outsourcing engagements