The initial motivation for outsourcing was saving money. The work was often outsourced to suppliers who were more efficient or had lower wages. Later, other benefits surfaced. Like the reduced need to hire and train specialized staff, which allows companies to focus on their core business and help them adapt more quickly to changing market demands. It has evolved as well to include front-end customer services such as call centers. Then came the IT and HR functions, which are managed and controlled by an external vendor.
BPO saves customers capital investment and offers cost savings, continuous improvement, and increased productivity. It allows companies to convert capital expenditures into operating costs.
In recent years, there has been a growing trend among large and medium-sized companies from the US and the EU to outsource back-office activities, including IT, HR, procurement, finance, and logistics. These functions often vary from subsidiary to subsidiary, country to country and are increasingly outsourced to BPO contractors. Through simplification, standardization, and scaling, BPO providers can create more efficient systems. In turn, this can help their clients to enter new markets faster, improve decision-making and integration, increase sales.