Business process outsourcing (BPO) can be defined as the act of giving another party responsibility for performing what would otherwise be an internal system or service. For instance, an insurance company might outsource their claims processing program or a bank might outsource their loan processing system.

By outsourcing their back office operations to third world countries, companies have the following advantages: 

(i) Achieve cost reductions: This is made possible through process improvements, reengineering, and use of technologies that reduce and bring administrative and other costs under control. 

(ii) Key in on the company's main business: With the day-to-day back office operations taken care of, the management is free to devote more time to building the company’s core businesses 

(iii) Obtain outside expertise: Rather than recruiting and training personnel, BPO ensures that domain experts from another company provide the needed guidance and skills.

(iv) Meet constantly changing customer demands: Many BPO vendors provide the management with flexible and scalable services to meet the customers’ changing requirements, and to support company acquisitions, consolidations, and joint ventures. 

(v) Achieving revenue increases: By outsourcing non-core processes, companies can focus on increasing their sales and market share, develop new products, expand into new markets, and enhance customer service and satisfactions.