What Is the Difference between ITO and BPO?

Geri Terzo

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.

ITO professionals must be skilled to recognize technology capabilities that are needed at a particular organization.
ITO professionals must be skilled to recognize technology capabilities that are needed at a particular organization.

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.

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Discussion Comments


Outsourcing customer service has proven to be a terrible idea over and over again. I can't imagine a company in France, for example, turning over their customer service to a group of people who speak French as a third or fourth language. No, they want native French speakers to do their customer service.

I cringe when I get an "accent" on the other end. Not because I dislike people from other cultures -- far from it -- but there is inevitably a breakdown in communication. They don't quite understand what I'm asking, and won't go off-script to help me. Frustrating doesn't even begin to cover it.


Both of these are *bad* ideas, by and large, especially for a company with a local presence.

ITO is a terrible idea. Outsourcing technology is just a bad idea. It never works like it's supposed to. My company has another branch about 40 miles away, and the bulk of the technical support is in that office. We have a great IT guy, but it stinks when we have a real problem, he can't fix it and has to call one of the guys to make a 40-mile drive. I can't even imagine what it's like if the tech support is in another country! Sometimes, you have to get your hands on the machines to fix what's wrong.

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