Business Process Outsourcing (BPO)
Business process outsourcing (BPO) is engaging a third-party provider to run part or all of a business function on your behalf, rather than doing it with your own staff.
In the contact centre world, the function being outsourced is most often customer service itself — inbound calls, outbound, email, chat and social — plus back-office work like processing and administration, handled end to end by a specialist provider, frequently under your brand.
BPO is about who does the work: a third party rather than you. It's frequently confused with offshoring, which is about where the work is done. The two often travel together, but they aren't the same thing.
Used well, a BPO gives you scale, flexibility and specialist expertise without building it all yourself. Chosen on price alone, it can cost more than it saves once the hidden costs, oversight and customer-experience risks are counted.
This guide covers what BPO is, the full range of functions that can be outsourced, how it differs from offshoring and outsourcing, the benefits and the risks, and how to find and choose the right provider.
What it is
Engaging a third-party provider to run part or all of a business function — in contact centres, typically customer service and back-office work — instead of running it in-house.
Why it matters
It can add scale, flexibility and expertise fast, but a BPO runs your customer interactions — so the choice is a customer-experience decision, not just a cost one.
What this guide covers
What BPO is, what can be outsourced, BPO vs offshoring vs outsourcing, the benefits and risks, the Australian angle, and how to find and choose a BPO.
What is Business Process Outsourcing?
In plain English
Business process outsourcing is hiring an outside company to run a part of your business for you. Instead of recruiting, training and managing a team yourself, you contract a specialist provider to deliver that function to an agreed standard.
In contact centres, the "business process" is usually customer contact — your customers call, email or chat, and they're served by the BPO's agents, frequently using your systems and speaking under your brand.
The provider that delivers this is itself commonly called "a BPO". A BPO can be onshore (in your own country), offshore (overseas), or on-site (working on your premises but employed by the BPO) — the term says nothing about location, only that the work has been handed to a third party.
What it is
A third-party provider running part or all of a business function — in contact centres, customer service and back-office processing — to an agreed standard, often under your brand.
What it isn't
It's not the same as offshoring. BPO is about handing work to a third party; offshoring is about doing work in another country. A BPO can be onshore, offshore or on-site.
What Can Be Outsourced to a BPO?
There are hundreds of functions a BPO can manage for you. In practice they divide into front office work (anything with direct customer interaction) and back office work (the processing behind it, with no direct customer contact). A provider might run one, some, or all of it.
📞 Front office — work that involves direct customer interaction
- Customer service: a broad bucket across phone, email, chat and social — general questions and answers, complaints and escalations, billing and payments, claims, advice, product recalls, and emergency response or roadside assistance.
- Sales: inbound sales, outbound telemarketing, lead generation, appointment setting, order taking, upselling and retention.
- Technical support: helpdesk support, troubleshooting and problem resolution.
- Collections: handling inbound payments or making outbound calls to recover outstanding debt.
- Surveys and research: outbound calls to survey consumers and businesses, plus database cleansing to improve list quality.
- Fundraising: inbound and outbound campaigns for charities and not-for-profits.
🗂️ Back office — work with no direct customer interaction
- Human resources: recruitment, payroll processing, employee database management and leave management.
- IT managed services: infrastructure monitoring, mobile device management, IT operations, and software updates and patching.
- Administrative: data entry and processing, document processing, digital mailroom, records management and sales support.
- Finance and accounting: bookkeeping, accounts payable and receivable, financial reporting, and bank and account reconciliations.
💡 It doesn't have to be all-or-nothing
You can outsource an entire operation, a single channel, or just overflow, after-hours or seasonal peaks while keeping a core team in-house — a "blended" model that adds flexibility without handing over the whole customer experience.
BPO vs Offshoring vs Outsourcing
These terms overlap and get used loosely, but they describe different things. Two are effectively the same idea; one is about location.
Outsourcing
The broad term for handing a function to a third-party provider rather than doing it yourself. BPO is a form of outsourcing — specifically, outsourcing a whole business process.
BPO
Business process outsourcing — outsourcing an entire function or process (like customer service) to a specialist provider, who runs it end to end. "A BPO" is also the provider itself.
The one-line distinction
BPO and outsourcing answer "your team or someone else's?" — someone else's. Offshoring answers "which country?". A BPO can be onshore (an Australian provider) or offshore (overseas) — most Australian contact centre offshoring is done by engaging an offshore BPO, which is why the two terms get blurred.
Benefits of Using a BPO
Outsourcing to a BPO is partly a cost decision, but the bigger pull is often speed, flexibility, expertise and not having to build the capability yourself.
🧠 External expertise
Instant access to specialist skills, management and experience that would take you significant time and money to build in-house.
⚙️ Improved efficiency
Because these functions are their core business, BPOs are often more efficient — and many use automation such as robotic process automation (RPA) to drive further savings.
✅ Compliance & governance
Established BPOs bring mature, well-governed processes, which can save you considerable time and expense setting up your own compliance framework.
💲 Cost savings
From efficiency, expertise, technology and scale, a BPO can deliver the same function for less than doing it in-house — though the saving is rarely as large as the headline rate suggests.
🎚️ Flexibility & scale
Convert fixed cost into variable cost and flex up or down with demand, peaks and campaigns without hiring and redundancy cycles.
🎯 Focus
Handing discrete functions to a provider frees your team to focus on your core product, strategy and future planning.
Risks & Downsides of Using a BPO
Any time you hand a business function to a third party it carries some risk. None of these are dealbreakers on their own, but they should be weighed deliberately rather than discovered later.
What to watch for
- Estimating the true cost: direct labour is easy to price, but recruitment, training, technology, management and oversight are harder to pin down — and easy to under-budget.
- Exchange rates: with an offshore BPO, currency movements can have a big impact on your real cost over the life of the contract.
- Training costs: both the initial ramp-up and ongoing training as products, systems and policies change.
- Staff turnover: a BPO with a poor culture and high attrition passes those costs back to you through more recruitment, more training and lost productivity.
- Productivity variables: a BPO can be more productive, but authorisation levels, system access and process handoffs can create slowdowns.
- Systems access & security: integrating a BPO with your internal systems can be complex and introduces data-security considerations that need careful management.
⚠️ Don't choose on the rate card alone
The most common outsourcing mistake is selecting on the quoted seat rate and discovering the true cost — in oversight, quality, rework and customer churn — later.
ACXPA's view is that a BPO can be an excellent decision, onshore or offshore, but it should be made on total cost and customer outcome. Compare like for like: the all-in cost per seat and the experience your customers actually receive. With an offshore provider, remember mandated costs like the Philippines' 13th month pay that don't show up on the headline quote.
Finding & Choosing a BPO
BPOs come in every shape — from global outsourcers with hundreds of thousands of staff across the world to small niche providers with a handful of specialists. They vary by location, focus and size:
By location
Onshore (in Australia), offshore (overseas, usually lower cost), or on-site (the BPO's staff work on your premises alongside your team). See offshoring for the location side of the decision.
By focus & size
Providers specialise — front or back office, B2B or B2C, inbound or outbound, and by channel — and range from global giants to niche specialists. The right fit depends on your requirements, not the biggest name.
🧭 Free help matching you to the right BPO
CX Connect is ACXPA's free industry service that connects you with outsourcers that meet your specific requirements. Rather than cold-calling providers, answer a few questions in the Call Centre Outsourcing Wizard and get matched to suitable BPOs — and read the Call Centre Outsourcing guide for the models and trade-offs.
💡 Or search and shortlist yourself
The ACXPA Supplier Directory lets you search providers directly to ask questions, request proposals and arrange site visits — browse front-office BPOs (including the Philippines and onshore Australia) and back-office BPOs. For hands-on help, you can also engage a specialist outsourcing consultant.
The Australian Angle
For Australian businesses, the BPO decision carries an extra consideration when the provider is offshore: privacy law, and how customers feel about it.
Privacy and your customers' data
Using an offshore BPO usually means disclosing your customers' personal information to a recipient overseas, which engages Australian Privacy Principle 8 (APP 8) on cross-border disclosure — broadly, you remain accountable for how that overseas recipient handles the personal information you send them.
So choosing a BPO is a data-governance decision too: be clear in your privacy policy about overseas disclosure, do your due diligence on the provider's security, and confirm your obligations with a qualified adviser. This is general information, not legal advice.
💡 Onshore is a valid option too
An onshore Australian BPO keeps the work in the local time zone and data jurisdiction, and lets you market an "Australian-based" team — which some customers value. If onshore is on the table, see ACXPA's guide to outsourcing to an Australian contact centre, and weigh it against offshore on the same basis.
Frequently Asked Questions About BPO
What is business process outsourcing (BPO)?
Business process outsourcing is engaging a third-party provider to run part or all of a business function for you instead of doing it with your own staff. In contact centres, the outsourced function is usually customer service — inbound calls, outbound, email, chat and social — plus back-office processing, handled end to end by a specialist provider, often using your systems and under your brand. The provider itself is also commonly called "a BPO".
What functions can be outsourced to a BPO?
Hundreds. They split into front office (direct customer interaction) and back office (no customer contact). Front office includes customer service, complaints, billing, claims, sales, technical support, collections, surveys and fundraising. Back office includes human resources, IT managed services, administration and data processing, and finance and accounting. You can outsource an entire operation, a single channel, or just overflow, after-hours or seasonal peaks.
What's the difference between BPO and offshoring?
They answer different questions. BPO is about who does the work — a third-party provider rather than your own team. Offshoring is about where the work is done — in another country. A BPO can be onshore (a provider in your own country), offshore (overseas), or on-site (on your premises). Most Australian contact centre offshoring is done by engaging an offshore BPO, which is why the two terms are often blurred, but they aren't the same thing.
What's the difference between BPO and outsourcing?
BPO is a type of outsourcing. Outsourcing is the broad term for handing any work to a third party. Business process outsourcing specifically means outsourcing an entire business function or process — such as your whole customer service operation — to a specialist provider who runs it end to end, rather than outsourcing a single task or project.
What are the benefits of using a BPO?
Access to external expertise, improved efficiency (often supported by automation such as RPA), mature compliance and governance, cost savings, flexibility to scale up and down with demand, and the freedom to focus internal effort on your core business. A BPO already has the people, premises, technology and processes, so you can stand up or scale a contact centre far faster than building one yourself.
What are the risks of using a BPO?
The main ones are estimating the true cost (labour is easy, but recruitment, training, technology and oversight are harder), exchange rate movements with offshore providers, initial and ongoing training costs, staff turnover if the BPO has a poor culture, productivity slowdowns from authorisation or system-access issues, and the complexity and data-security considerations of integrating with your systems. Weigh them deliberately rather than discovering them later.
Is a BPO always offshore?
No. A BPO can be onshore — an Australian provider running an Australian team — offshore in a lower-cost country such as the Philippines, or on-site working on your premises. "BPO" describes the outsourcing arrangement, not the location. An onshore BPO keeps the work in the local time zone and data jurisdiction, while an offshore BPO typically trades some of that for a lower cost. Many businesses compare both before deciding.
How do you find and choose the right BPO?
You can search providers yourself in the ACXPA Supplier Directory — by country, and by front-office or back-office focus — to request proposals and arrange site visits, or engage a specialist outsourcing consultant. ACXPA also runs CX Connect, a free service that matches you to suitable BPOs based on your requirements via its Call Centre Outsourcing Wizard. Whichever route you take, choose on total cost and customer outcome, not the headline seat rate alone.
Where to Next
Summary: Business Process Outsourcing (BPO)
Business process outsourcing (BPO) is engaging a third-party provider to run part or all of a business function for you — in contact centres, usually customer service and back-office work, delivered end to end under your brand.
It can cover a huge range of functions, from front-office customer service, sales, support and collections to back-office HR, IT, administration and finance. BPO is about who does the work, not where: a provider can be onshore, offshore or on-site, which is what distinguishes it from offshoring (a question of location).
The benefits — expertise, efficiency, compliance, cost savings, flexibility and focus — are real, but so are the risks: true cost, exchange rates, training, turnover, productivity and systems security. Because the provider becomes the voice of your brand, choose on total cost and customer outcome, counting mandated offshore costs like 13th month pay, not the headline rate.
To find the right fit, use ACXPA's free Call Centre Outsourcing Wizard to get matched to suitable providers, or search the Outsourcing section of the ACXPA Supplier Directory yourself.
