A service segment of the Process Outsourcing Industry, Business
Process Outsourcing is the use of an outside business services vendor (and its supervised personnel), either
on the customer’s premises or off-site at the vendor’s location, to perform a function or run a department
that was previously staffed and supervised by the customer directly. (Sometimes, but not necessarily, limited to situations where some or all of the customer’s previous staff performing that function are hired by the outsourcing vendor.) BPO relationships differ from project work in that the duration of the contracts are typically much longer than one year or more and are not necessarily driven by milestones or deliverables but ongoing provision of services. In Europe, certain legal obligations are placed on the outsourcing company. For example, a formal Transfer of Undertakings Procedure (TUPE) applies to outsourced functions whereby the contracts of employment of all staff within the affected area are automatically transferred to the new employer, which then takes over all rights and obligations arising from those contracts of employment, except criminal liabilities and pension obligations.
Outsourcing can be undertaken in a different country, usually to leverage cost advantages and this activity is more commonly referred to as ‘offshoring’. While many offshore projects are outsourced to third-party intermediaries, a company can offshore activities using facilities/resources it owns/controls in another country, such that the term does not necessarily imply outsourcing.