ITO vs BPO

Business process outsourcing (BPO) and information technology outsourcing (ITO) both represent ways that a business can reach beyond its own capabilities and introduce another provider for support. Each of these providers have unique roles, but there is some overlap as well. Essentially, a company turns to ITO and BPO providers to create more efficient work flows. An ITO provider should create cost savings tied to computer networks and other information technology systems, while a BPO provider’s services should lead to greater operational efficiencies in most all areas of a business.

A business may turn to hire both ITO and BPO providers. The scope of services offered by both of these providers is different, and one does not eliminate the need for the other. Also, on average, there is no rivalry between the types of services offered by BPO and ITO providers.

Unless financial savings are uncovered relating to technology systems and procedures, an ITO provider has not made a difference. Once a BPO provider has been hired, improvements in business processes that may lead to greater financial results at a business must be realized in order for that service to be deemed a success. The efficiencies attained through a BPO provider could be tied to human resources, finance, or really any operational area of an organization that is part of a company’s core business.

Although ITO and BPO services are designed to complement one another, it may make sense for an organization to adopt one before the other. Introducing an ITO provider first can lead to the quickest financial savings, which is a good place to begin. An ITO provider does not need to remain engaged over the long term, as after potential cost savings are identified, those changes can be appropriated by the business. Once any cost savings are realized, the conditions may be ripe for a BPO provider to enter the scenario and create greater operational efficiencies throughout the organization.

Other differentiating factors between ITO and BPO firms include the expertise behind each provider. ITO professionals are skilled to recognize the types of technology capabilities that are needed at an organization, ranging from storage to support to wireless services. Providers should be able to negotiate costs and terms or streamline services based on the knowledge that these industry professionals possess. BPO providers perform specific tasks on behalf of an organization, such as customer service, accounting, or personnel management.