Business Process Outsourcing (BPO) refers to the practice of contracting specific business functions or processes to external service providers. It involves transferring the responsibility of performing non-core or support activities to specialized companies, allowing the organization to focus on its core competencies and strategic initiatives. BPO can encompass a wide range of processes, such as customer service, human resources, finance and accounting, IT support, and more.

Example
Business Process Outsourcing is a manufacturing company that decides to outsource its payroll processing and employee benefits administration. Instead of handling these HR functions in-house, the company contracts with an external HR outsourcing provider. The service provider takes over the payroll processing tasks, including salary calculation, tax deductions, and issuing payslips. They also manage employee benefits, such as health insurance enrollment and retirement plans.