Business process outsourcing (BPO)

Business process outsourcing (BPO) involves the contracting of non-primary business activities and functions to a third-party service provider. Typical BPO services include internal business functions such as the handling of payroll, human resources, and accounting; and customer-related services such as customer interfacing.

BPO can be referred to by different terms related to the specific nature of the outsourcing. Common terms include: information technology enabled services (ITES) for IT-based processes, knowledge process outsourcing (KPO), legal process outsourcing (LPO), engineering process outsourcing (EPO).

In the construction industry, companies can use BPO for various activities, including:

• IT services.
• CAD and BIM.
• Human resources and administration.
• Finance and accounting.
• Security.
• Facilities management.
• Project management.
• Structural design.
• Document management.
• Marketing and communications.
• Concept design.
• Detail engineering.
• Energy modelling and audits.
• Landscape design.

The primary advantage of BPO is the added flexibility that it offers a company. Since most BPO providers offer services on fee-for-service bases, a company can transform fixed into variable costs. By doing so, a company can be more flexible in responding to changes due to required capacity and workload, and therefore don’t need to invest in particular assets. By being relieved of certain activities, a company is able to focus on its core competencies, forward planning, and enhance value chain engagement.

However, there are some risks attached to BPO which can include an over-dependence on service providers, underestimated running costs, and the danger of data privacy breaches.

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