6 Key Benefits of Business Process Outsourcing in 2025
Revenue in the global business process outsourcing (BPO) industry is expected to reach “a staggering” $0.41 trillion in 2025. Of this, $152 billion are likely to be attributed to the United States alone.
India is another country that maintains its dominance on the BPO market, primarily because of its massive pool of skilled IT candidates.
By 2029, global revenue for the BPO market is expected to reach $0.49 trillion, according to German data-gathering and visualization platform Statista.
BPO is when a company hires another company to take over certain business tasks, specifically those that rely heavily on IT. The external provider manages these tasks and is held accountable for specific results.
BPO services can be either general, used by many industries, or specialized for a particular industry.
Research by consulting and advisory firm Deloitte found 52% of executives saying they outsource business functions. Meanwhile, 76% of executives say “IT functions are outsourced.”
Of these outsourced IT functions, cybersecurity, app or software development, and IT infrastructure services are the most widely outsourced functions.
As we near the end of the first quarter of 2025, concepts and business targets begin to overlap. It is, therefore, crucial to identify the top advantages of BPO, along with the challenges facing this critical industry.
What BPO looks like
Imagine a retail company experiencing a sudden surge in customer inquiries during the holiday season.
Instead of hiring and training many temporary employees, which would be costly and time-consuming, they turn to a BPO provider specializing in customer support.
The BPO service provider can quickly scale up the company’s team to handle the increased volume, ensuring customers receive timely assistance.
When the holiday rush subsides, the company can easily scale down its support operations by reducing the number of outsourced agents.
This flexibility allows the company to adjust its resources in real time, avoiding the overhead of maintaining a large, permanent staff for seasonal peaks.
The 5 challenges of BPO
With more companies turning to outsourcing business solutions to reap the benefits, it’s no surprise they encounter new hurdles.
Striking a balance is hard but doable. It relies on knowing what challenges you might face and addressing them early on in your relationship with the BPO service provider.
Here are the 5 most common challenges when companies use business process outsourcing:
1- Data security: Since BPO services are primarily focused on IT and tech-related services, data security becomes a critical challenge for businesses.
Companies need to clarify what solutions they are outsourcing, how they will handle data security and ensure compliance to mitigate potential risks.
2- Communication and coordination: Companies often struggle with internal communication, so it’s no surprise that communication with an external service provider may falter.
With BPO, challenges often arise from cross-cultural communication and different business expectations. It’s important to get ahead of that in your relationship with a BPO service provider.
3- Maintaining a certain level of quality: When you work with an external service provider, you expect a certain level of quality. It’s imperative you put this in writing.
The best way to determine of your BPO provider meets your quality standards or not is to have key performance indicators (KPIs) in place. Set the bar and inform your outsourcing provider so they can provide the high quality of service you need.
4- Hidden costs: One of the biggest challenges with BPO solutions is hidden costs. You agree on a certain figure and then you discover your BPO provider requesting additional fees.
These unexpected costs can eat into the return on investment (ROI) expected from the provided BPO service.
5- Loss of control: Lastly, companies will often struggle with lost or reduced control over their business processes due to outsourcing. This also happens when companies rely heavily on various third-party companies.
It is something to consider when outsourcing your operations. Be sure to address what needs your full attention and needs to be fully in-house, along with the processes you can outsource and let a third-party handle from A to Z.
Strategic advantages of business process outsourcing
It’s not all gloomy for BPO. There are many advantages to outsourcing various business processes. Here are our top benefits of BPO:
1- Higher business efficiency and productivity
As a business grows, so do its operations. However, one of the biggest issues is the cost and time taken to handle non-core business operations.
For example, if a company operates various warehouses, its main operations fall under supply chain management and manufacturing. However, handling non-core operations like human resources, marketing, and even sales, burden team members.
Outsourcing such operations is an important advantage of BPO. It’s one of the top reasons companies turn to BPO providers in the first place.
By relying on a BPO provider, companies can streamline business operations, enhance their workflows, and remove bottlenecks. They can focus on their core competencies and revenue-driving operations.
Business process outsourcing can also help executives automate repetitive tasks and gain access to specialized tech solutions and expertise.
2- Cost optimization
Let’s face it, cost reduction usually sounds too good to be true and carries certain negative connotations in business. Another major benefit of business process outsourcing is being able to optimize costs.
This could come in many forms such as:
- Lower labor costs when hiring personnel in offshore locations or third-world countries
- Reduced overhead expenses such as office space or IT infrastructure
- Gaining access to a flexible or remote workforce
3- Enhancing scalability and flexibility
By outsourcing non-core business functions, organizations can scale resources based on demand and their business needs.
Scalability also comes in the form of access to a global talent pool, where highly skilled personnel may not be available locally. Through their large networks of skilled IT and non-IT talents, BPO providers can help companies scale through recruitment.
4- Powering up customer service
Whether you sell a physical product or an IT or business solution, customer service is a critical post-purchase solution.
However, hiring a 24/7 customer support team is not only an expensive endeavor, it’s like building an entirely new business arm.
On the other hand, business process outsourcing providers have the skills, workflows, and setups needed to launch a 24/7 customer service offering.
They can even provide you with bilingual customer support teams or connect team members in several countries for your customer service team.
Doing so can increase customer satisfaction and retention for you, which can ultimately translate to higher customer lifetime value (CLV) and higher revenues.
5- Technological benefits of BPO
Another advantage of business process outsourcing is innovation. Reducing focus on non-core operations means freeing up internal resources and allowing them to focus on strategic and innovative products or initiatives.
BPO service providers can also provide companies with access to cutting-edge technologies and best practices to use such solutions to generate the best results.
For example, this can mean leveraging cloud computing, artificial intelligence (AI), and various automation solutions. All of this can boost operational efficiency and customer experience.
6- Data security and compliance
We’ve mentioned how data security is a common challenge in BPO. It’s also an advantage if you hire the right partner.
Since BPO solutions tend to rely heavily on IT, working with a BPO agency or company can help you increase data security for your company and your customers.
They can implement security measures and protocols you may not be able to handle on your own.
BPO providers can also help you maintain legal compliance with local and global agencies.
Make BPO work for you
Working with an external service provider, be it an outsourcing agency or business process outsourcing provider can be scary. Questions arise and need to be addressed.
By addressing potential pitfalls and worries, you can get ahead of the challenges and reap the benefits of BPO. In addition, your questions can help you identify the best BPO partner for your business. It can also help you negotiate favorable and measurable terms.
However, one thing to note about outsourcing any of your operations is you need to be aware of how to measure the results and how those results fit in with your broader business strategies and targets.
Finally, you need to ensure that the quality of the work delivered by the BPO provider meets your expectations and plays into your business growth.
