BPO (Business Process Outsourcing)

What Is BPO (Business Process Outsourcing)?

Business Process Outsourcing (BPO) is the practice of contracting specific business operations to third-party service providers. In customer service, BPO typically refers to outsourcing contact center operations, including phone support, email handling, live chat, and back-office tasks, to specialized firms that manage agents, infrastructure, and quality assurance on behalf of the hiring company. Major BPO providers include companies like Accenture, Cognizant, TCS, and Capgemini.

The global BPO market is projected to reach $327 to $354 billion by 2026, according to Fortune Business Insights and Research Nester, with customer service remaining one of the largest outsourced segments.

How BPO Works in Customer Service

A company that outsources its customer service to a BPO provider typically defines the scope of work, service-level agreements (SLAs), key performance indicators (KPIs), and escalation procedures. The BPO firm then recruits, trains, and manages a team of agents who handle customer interactions on the company's behalf. These agents work from the BPO's facilities (onshore, nearshore, or offshore) and use the company's tools, scripts, and knowledge bases.

There are three common BPO models. Offshore outsourcing sends operations to lower-cost countries like the Philippines or India. Nearshore outsourcing uses providers in nearby countries with similar time zones. Onshore outsourcing keeps operations within the same country. Each model trades off between cost savings, language and cultural alignment, and time-zone coverage for omnichannel support.

Why BPO Matters for Customer Service Teams

BPO enables companies to scale support operations quickly without building in-house teams. It is especially valuable for handling seasonal demand spikes, entering new markets, providing 24/7 coverage, and managing high-volume, lower-complexity inquiries. Cost efficiency is the primary driver: outsourced agents in offshore locations can cost 40% to 70% less than domestic hires.

Market insight: The customer service BPO submarket alone was valued at approximately $30 billion in 2023 and is projected to reach $55 billion by 2032, growing at a 6.5% CAGR, according to DataIntelo research.

However, BPO comes with trade-offs. Outsourced agents may lack deep product knowledge, quality can be inconsistent, and managing a third-party workforce introduces oversight challenges. Response times and resolution rates often lag behind in-house teams, especially for complex or technical issues.

BPO vs. AI-Powered Customer Service

The traditional BPO model is being disrupted by AI customer service platforms that can handle a significant share of inquiries without human agents. While BPO scales by adding people, AI Agents scale by adding compute. The comparison is striking: BPO agents require weeks of training and ongoing quality management, while an AI Agent can be deployed in days and improves with every interaction.

That said, BPO and AI are not mutually exclusive. Many organizations use AI to handle routine inquiries and BPO agents for complex cases, creating a hybrid model where AI resolves the majority of tickets and human agents (in-house or outsourced) focus on high-value interactions. This approach reduces BPO costs while improving CSAT and first contact resolution.

The Maven Advantage: Reduce BPO Dependency with AI Resolution

Maven AGI helps companies reduce their reliance on BPO by resolving the majority of customer inquiries through AI Agents. Rather than outsourcing volume to third-party agents, Maven resolves issues directly, with the same quality and brand voice every time. When human support is needed, Maven's AI Copilot and Agent Assist tools give agents (whether in-house or BPO) the context and recommendations they need to resolve faster.

Maven proof point: Enumerate, a PropTech company, achieved a 91% resolution rate with Maven AGI, demonstrating how AI can handle the volume that would otherwise require large BPO teams.

With $78M in funding and 100+ out-of-the-box integrations, Maven AGI deploys into existing BPO workflows without replacing them, augmenting outsourced teams while reducing overall ticket volume. Roo, a healthcare company, saw a 50% ticket reduction after deploying Maven, directly reducing the workload that would otherwise flow to outsourced agents. Learn more about McKinsey's analysis of outsourcing trends or read McKinsey's research on operational efficiency for context on how AI is reshaping outsourcing economics.

Frequently Asked Questions

What does a customer service BPO actually do?

A customer service BPO manages all or part of a company's support operations. This includes hiring and training agents, managing call centers, handling phone, email, and chat inquiries, tracking KPIs like average handle time and CSAT, and providing reporting. Some BPOs also handle back-office tasks like order processing, returns, and data entry.

How much can AI reduce BPO costs?

The impact depends on the volume and complexity of inquiries. Maven AGI customers typically see 50% to 93% of inquiries resolved by AI, which directly reduces the number of tickets that need human agents. For a company spending $2M annually on BPO, resolving 80% of tickets through AI could reduce outsourcing spend significantly while improving support ROI.

Is BPO still relevant in the age of AI?

Yes, but its role is changing. BPO is shifting from a volume play (handling large numbers of routine tickets) to a specialization play (handling complex, sensitive, or high-value interactions that AI cannot yet resolve). Companies that combine customer service automation with targeted BPO for edge cases get the best of both worlds: cost efficiency from AI and human empathy for the cases that need it.

What are the risks of relying solely on BPO?

Sole reliance on BPO creates risks around quality control, agent turnover, brand consistency, data security, and scaling costs. As volume grows, BPO costs grow linearly. AI-first approaches like Maven AGI offer a different cost curve: higher resolution rates without proportional cost increases, plus consistent brand voice across every interaction.

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