Business Process Outsourcing (BPO) can be defined as contracting of one company by another to execute a business process end to end .This is only a basic definition for BPO. Today it can be defined as delegation of an IT intensive business process to an external power that owns, administers and manages it according to defined set of metrics. Organizations across the world are farming out a part of their operations to a third party or an in-house facility for distinct cost or other advantages. Monetary advantage by cost reduction is the prime motive behind the process of outsourcing. For example the cost benefits of shifting routine work from the United States to India can easily work out to 30-40 percent or more. The labour cost gains may account to about 75% in some cases. A skilled worker in India earns between $6 & $8 in India as opposed to $12 in the United States.
Over the last few years, outsourcing of business processes has been gaining popularity driven by the fact that US firms have been enjoying much success from adopting this business strategy. European organizations have increasingly been focusing on what they identify as their core competencies and have been looking to reduce costs while maintaining high levels of quality for non-core activities and processes. To this end, two broad approaches are developed.