The immediate benefits of BPO are certainly favorable; the long-term impact is mind-boggling.

Outsourcing involves the transfer of the management and/or day-to-day execution of an entire business function to an external service provider. The client organization and the supplier enter into a contractual agreement that defines the transferred services. Under the agreement the supplier acquires the means of production in the form of a transfer of people, assets and other resources from the client. The client agrees to procure the services from the supplier for the term of the contract. Business segments typically outsourced include information technology, human resources, facilities and real estate management, and accounting. Many companies also outsource customer support and call center functions such as telemarketing, customer services, market research, manufacturing and engineering.

`Outsourcing' and `offshoring' are used interchangeably in public discourse despite important technical differences. Outsourcing involves contracting with a supplier, which may or may not involve some degree of offshoring. Offshoring is the transfer of an organizational function to another country, regardless of whether the work is outsourced or stays within the same corporation. BPO is often divided into two categories: back office outsourcing, which includes internal business functions like billing etc., and front office outsourcing, which includes external business functions like customer-related services such as marketing or technology support. Outsourcing is a trend that is becoming more common in information technology and other industries for services that are usually regarded as intrinsic to managing a business.

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