Short answer
Business process outsourcing is the practice of contracting a business function, such as customer support, finance and accounting, back-office administration or IT services, to an external provider rather than staffing it internally. In the Philippines it is a major services export industry, usually discussed together with IT services under the wider label IT-BPM.
Also called: BPO, IT-BPM, Outsourcing
The distinction that matters commercially is between outsourcing a process and outsourcing people. Classic BPO transfers a defined function with its own service levels and metrics — the provider owns how the work gets done. Staff augmentation and dedicated-team models instead supply engineers or specialists who work inside the client’s process and report into its management. The contracts, the pricing and the failure modes all differ.
For Philippine businesses the term cuts both ways. The country is a destination for outsourced work from abroad, and local SMEs also outsource their own functions, software development and support among them, to domestic providers. The considerations are the same in either direction: how the scope is defined, who owns the resulting work, what happens to personal data under the Data Privacy Act, and what handover looks like when the arrangement ends.
Common questions
Is BPO the same thing as offshoring?
No. Offshoring describes where work is performed; outsourcing describes who performs it. A company can offshore to its own subsidiary without outsourcing anything, and it can outsource to a provider in the same city. The Philippine industry is commonly both at once, which is why the two terms get used interchangeably.
Where this comes up in our work
Related terms
Commissioned Work & Copyright Ownership (Philippines)
Under the Philippine Intellectual Property Code (Republic Act 8293), a client who commissions and pays for creative work owns the work itself, but copyright stays with the creator unless a written stipulation says otherwise.
PEZA (Philippine Economic Zone Authority)
PEZA is the Philippine Economic Zone Authority, the government agency that develops and administers the country’s economic zones and registers the enterprises operating inside them.
Data Privacy Act of 2012 (RA 10173)
The Data Privacy Act of 2012 (Republic Act 10173) is the Philippine law governing how organisations collect, store, use and share personal information.
Custom Software vs Off-the-Shelf Software
Custom software is built for one organisation’s specific process; off-the-shelf software is a finished product many organisations subscribe to, such as Shopify or QuickBooks.
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