BPO is the act of transferring some of an organization's repeated non-core and core business processes to an outside provider to achieve cost reductions while improving service quality. Because the processes are repeated and a long-term contract is used, outsourcing goes far beyond the use of consultants. If done well, BPO results in increasing shareholder value. The main difference between BPO and more traditional IT outsourcing is that BPO offers companies a way of achieving transformational outcomes much more quickly. In a typical BPO contract, a service provider takes over a specific corporate function. Effective BPO encompasses much more than just changing who is responsible for performing the process. In BPO, the outside provider not only takes on the responsibility to manage the function or business process, but also re-engineers the way the process has been traditionally done.

Research indicators

Forrester predicts that by the year 2015, about 3.3 million US services industry jobs and $136 billion in wages will move offshore.

EDS, meanwhile, forecasts that the BPO market will grow at an annual clip of nine percent to 11 percent through 2007

Mckinsey and Company By 2008, global remote-service operations may undertake activities accounting for half a trillion dollars around the world and representing every element of the value chain. Such operations could generate cost and other savings of about $400 billion, to be shared by the users and the providers as profits

Deloitte study discovers 7% of Global Financial Institutions plan to outsource offshore.

It has been found that medium to large sized corporations employing about 5000 employees can get a cost benefit of $9.7 Mn - $18.4 Mn per annum by outsourcing their back office departments. The saving can vary from 35.8% to 50.7% of the total operations cost. This saving is accrued because of

a- saving in cost due to reduced in-house back-office staff and
b- better SLA deliverables because of outsourcing