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What Is Involved in BPO Setup?

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  • Written By: Terry Masters
  • Edited By: Allegra J. Lingo
  • Last Modified Date: 20 September 2016
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Setting up a business process outsourcing (BPO) company involves picking a specialty, establishing an expertise, and implementing a system to deliver excellent performance. Functionally, the process involves many of the same tasks as setting up any service-oriented business. If the BPO intends to operate in a foreign country, however, it will have to navigate the regulatory environment there as well as in the owner's home country.

BPO setup depends largely on whether the business owner wants to provide a nearshore or offshore service. In nearshore outsourcing, both the business client and the BPO provider are in the same country. For example, a US business can outsource its payroll processing to another US company. In offshore outsourcing, the business client is in one country and the BPO operation is set up in another country, even if the BPO provider also operates in the client country. For example, a UK company might outsource its telephone customer service to a call center in India.

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In both instances, a prospective BPO provider develops a plan and obtains financing. Operationally, the owner registers the business with the appropriate government agency, secures a location to run the company, employs and train workers, and purchases equipment and other resources to make the system work. This basic BPO setup becomes much more complicated, however, if the owner wants to establish an offshore operation. A BPO setup offshore has to comply with the regulatory environment of the host country, registering and setting up operations there. Locally-owned BPOs in host countries have to do the reverse and learn how to operate and recruit clients from countries such as the US and UK.

The unique parts of BPO setup concern specialty, expertise, and excellence. First, a business owner must determine which business process to target. Some BPO areas are saturated with providers, while others are still in their infancy. Second, the business owner should be an acknowledged expert in the selected specialty. Participating in trade groups and writing articles for publication will establish an owner's business acumen with the target process.

Last, the new BPO provider must have a system developed for delivering the service that can guarantee excellent performance with no excuses. This system is the company's product, and it has to be designed and packaged prior to soliciting clients. If the BPO setup seems complicated or if the owner does not have the needed expertise in an offshore country to establish operations, he can hire a consultant or facilitator that specializes in opening new BPO companies to ease the way.

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