The idea of business process outsourcing (PBO) is based on the contention that a business should identify and concentrate n its core competencies. It could outsource the routine activities to specialist outside firms rather than performing within the organization. Modern business enterprises go in for outsourcing of certain business activates to attain the following advantages:

(i)    Focus on Core Activities. The business can concentrate on its core activities better by outsourcing services such as advertising, financial, courier and customer support services to outside agencies.

(ii)    Ensuring Smooth Operations. Outsourcing of routine activities enables the firm to conduct its operations smoothly. For instance, outsourcing agencies can enable the firm to deliver mail, maintain plant and machinery, transport of staff, etc.

(iii)    No Blocking Up of Capital. The business firm need not make fixed investment in creating infrastructure for providing various facilities.

(iv)    Quality Services. The service providers have adequate infrastructure to offer the performance of the services on behalf of other firms. Specialized performance of services is ensured by the service providers.

(v)    Achieving Economy. It is economical to outsource some activities rather than organizing a separate department. That is why, delivery of dark or mail outsourced to courier agency by most of the firms. It is very costly to deliver dark through the firm’s staff.

(vi)    Business Success. Outsourcing to a service provider who is a specialist in the field adds to the success of the business firm and lowers the chances of risks.

(vii)    Expansion of Business. A business firm can concentrate on its growth strategies and outsource subsidiary services to outside agencies which are specialists in their respective fields.

(viii)    Freedom from Labour Troubles. Outsourcing of services means no addition to the existing staff of the firms. The staff of the outsourcing agencies is not the employees of the firm. Thus, the firm will avoid labour problems such as slow work, stoppage of work, strike, etc.

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