Business Process Outsourcing refers to the supplementing of technology or specialist process vendors in order to provide and manage an organization's processes and applications. Usually, BPO refers to the contracting of a specific business task to a third party provider and is broadly divided into two categories: back office outsourcing, which includes internal business functions such as billing or purchasing, and front office outsourcing, which includes customer related services, such as marketing or technical support.

Ideally, an organization's resources and energy should be focused only around its core competence, which ensures it a stand in the market. It's often found that peripheral activities such as payroll, system support, internal IT division, sales/marketing, inventory management, etc., go to a great deal in hampering the interests. This is where BPO is an advantage.

BPO allows an organization to focus only on its core competencies by outsourcing all the other support based departments or processes that generally consume a substantial amount of a time, energy, and resources. According to industry experts the BPO market is expected grow to $146 billion by 2008, while the marketplace is expected to fragment as vendors would start focusing on individual BPO segments, such as simple bulk transactions, broad shared services, high-volume vertical processes, and major vertical applications.

The most common examples of BPO are call centers, human resources accounting and payroll outsourcing. Unlike simply application service provider (ASP), a certain amount of risk is transferred to the company that is running the process elements on behalf of the outsourcer in case of BPO. Whereas BPO includes the software, the process management, and the people to operate the service, a typical ASP model includes only the provision of access to functionalities and features provided through the use of software, usually by means of web browser to the customer, teleconferencing, etc.