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The Changing Dynamics of the BPO Industry and Its Impact on Businesses

The changing dynamics of the BPO industry have also opened up new opportunities for businesses looking to outsource processes or tasks.

The Business Process Outsourcing (BPO) industry has undergone many significant changes over the past decade. The long winding history had its roots in the early 20th century when the manufacturing sector began contracting out specific business processes and functions. They began outsourcing clerical, support, and administrative tasks to third-party service providers. 

Fast forward to the 21st century, BPOs are now vital to many companies operating in a much broader category. And with new technologies and globalization of the business world coming along, they began outsourcing everything. This includes customer service, IT, and accounting services to address the changing needs of customers. 

In this blog post, let’s take a closer look at the changing dynamics of the BPO industry and its impact on businesses!

The Emergence of Call Centers

In the early 1900s, outsourcing began as a way for companies to outsource their telephone customer service operations to a group of workers stationed in specialized facilities. Prior to this time, businesses only relied on personal visits from customers. These were highly time-consuming and expensive. Customers also had to reach out to companies directly and often experienced long wait times or poor service. 

But with the advent of call centres, businesses could quickly get in touch and resolve customers’ issues. They can keep track of customer feedback, and provide a more efficient and satisfying experience for customers and employees. In addition, companies could also devote more resources to other aspects of their operations, such as product development and marketing, and save costs. 

The innovative shift of traditional interaction to call centres has indeed profoundly impacted and revolutionized all types of businesses. As a result, it has become an essential fixture in many companies still using call centres to provide quality customer service.

Time Sharing, Data Processing, and Entire IT Operations

The 1950s to late 1980s were significant years for the evolution of time-sharing, data processing and outsourcing entire IT operations in BPO. 

In the 1950s, time sharing from early computer systems introduced an efficient way of working. Multiple employees were already able to work on the same project at the same time. It allowed companies to save money and attain more organized communication and coordination, especially for banking and accounting. In addition, this system paved the way for later data processing advancements, such as automated telephone routing and customer service systems. 

A time of change for the data processing industry was evident in the 1970s. Businesses, microfilming companies, and law firms were starting to realize the potential of automated systems. Thus, they began investing in software to help automate their processes. It led to a proliferation of data processing software, which made it easier for them to process large amounts of customer data more quickly. It also allowed them to manage their operations productively while staying cost-effective. 

On the other hand, personal computers and word processing software made it easier for companies to process their data. BPO became more specialized and focused on customer service and sales. As a result, BPO companies became better at handling customer inquiries, tracking orders, and fulfilling requests. 

The Acknowledgement of BPO as a Legitimate Business Strategy

By the late 1980s, BPO service providers made their first noticeable impact when Eastman Kodak made an unforeseen move to outsource its IT systems that shocked the industry. It was the first time outsourcing was acknowledged as a legitimate business strategy for a company’s technological needs. 

Following Kodak’s footsteps and success, many companies saw that light that they began outsourcing their entire IT operations to BPO providers. The other part was also due to the high cost of maintaining in-house IT departments and the increasing popularity of personal computers and software applications. By outsourcing these functions, companies could save a penny on their operating costs and technology infrastructure. They could expand their businesses faster than they would have if they had tried to do it themselves.  

However, BPO companies in this phase were still either domestic or near-shore in their operations for the companies. 

How the Rise of the Internet Revolutionized BPO

Companies have gained a competitive advantage in the business world by utilizing BPOs.

Like most other industries, the rise of the internet was a game changer for BPO. And even though the modern-day internet stems from the year 1983, the transformation of businesses, organization strategies, and capabilities from an analog backbone to digital format started in the 1990s. Utilizing the internet has drastically changed how companies capture, process, share, and store data. Having access to it also made it possible for BPOs to diversify their offerings manifold to various businesses in the coming future. 

By the early to late 2000s, BPO providers started reassessing their place in the global supply chain through strategic B2B partnerships with their clients. They went beyond non-core and back-office operations and enabled IT offshore services. 

Future-facing, they also enhanced the skill sets of their workforce and adopted new technologies. This developed competencies across multiple industries. Since then, companies have been gaining a competitive advantage in the business world through the help of BPOs. 

The Current Times: How BPO Operates in Companies

As BPO grew to today, it rendered services across multiple departments, from bookkeeping, telemarketing, lead generation, human resources, technical support, and many more. This expansion was primarily driven by the increasing demand for businesses to outsource these types of services.

In addition, businesses also turn to BPO service providers now not only for operational efficiency and strategic know-how but also for innovation coming from empowered technology. It plays a crucial role in optimizing all these mediums to provide hassle-free communication. Thus, the lack of trust in technology is not applicable to their narrative. Some of these high-end capabilities and technological advancements are Robotic Process Automation (RPA), customer analytics, cloud computing, and cybersecurity services, to name a few. With the combined competencies of such, BPOs have indeed helped businesses mitigate risks. They increase quality assurance, reduce storage and cost, and operate promptly with scalability, flexibility, and more excellent value. 

Furthermore, along with how the economy is still recovering and adapting to the post-pandemic world, the BPO industry continuously becomes relevant and beneficial to the business market. Even more so, it is a redeeming solution for most companies to save their business operations affected by the turbulence of the pandemic. Through outsourcing, they stay ahead of the curve and defy challenging times.  


BPOs can now provide faster, more efficient, lower-cost, and more innovative solutions across industries.

The BPO industry is evolving at an unprecedented pace and significantly impacts businesses of all sizes. As BPOs continue to invest in different advancements, they will surely fulfill businesses’ ever-growing requirements in even greater value and capabilities. BPOs can now provide more incredible speed, higher efficiency, lower costs and more innovative solutions across industries.

With that said, it is also essential to point out that even though the future of BPO is promising and bright ahead, the rest is still shrouded in mystery. Its succeeding impact will depend on its level of preparedness that will decide its foothold in the market. Nevertheless, the changing dynamics of the BPO industry and its impact on businesses have been positively massive and globally life-changing. 

To spot the best people for the job on a global scale with equal capabilities, partnering with an excellent outsourcing marketplace like The Lead Enquiry is the best choice! 



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