Operating a small business in the current economy means lots of hours and lots of stress. Fortunately, some of the hours and stress can be reduced - while even saving money - with Business Process Outsourcing (BPO). However, BPO is not necessarily for everyone.

In its most basic sense BPO is the contracting out of essential, but non-core business processes to an outside provider to help achieve increased shareholder value. Most companies already outsource some of their processes. Outsourcing payroll and IT services are quite common; but there are many other non-core processes that can be outsourced. The list includes: bookkeeping, check preparation, financial statement preparation, bill preparation and mailing, accounts receivable, and benefits administration.

So, why do businesses outsource? Well, with BPO they can gain competitive advantages. The top three reasons businesses choose BPO are:

1. Allowing more time to focus on core competencies
2. Saving money, and
3. Tapping vendor domain expertise

Allowing more time to focus on core competencies means re-allocating time that was spent on the more administrative tasks to time spent on the activities that have the greatest impact on success i.e. sales, customer service, and operational efficiency.
Most companies save money when engaging in BPO mainly because a BPO firm realizes economies of scale. For example, a firm that processes accounts payable checks performs that task with greater frequency and efficiency than the small business' bookkeepers who pay their bills once a month. The overhead investments in equipment, software and employee knowledge are significantly reduced thus enabling the client company to save money.

Finally, tapping vendor domain expertise is of notable value. BPO firms specialize in specific tasks and are up to date with the latest trends in technology and any changes in the business law. Other things being equal, more expertise is always preferred.

However, BPO is not for everyone. The small business owner who is also the founder of the business, may find it hard to let go of some tasks - even though they are repetitive and cost valuable time. For some there is a perceived loss of control when a business outsources for example its accounts payable function. The key is to make sure your BPO vendor has a good line of communication with the small business owner and can be trusted.

Believe it or not, another disadvantage is what to do with the extra time that becomes available when using BPO. The business owner may have the option to reduce head count through attrition, early retirement or even by terminating one or more employees. Although, the latter can be difficult to stomach - especially when operating in a small town.

Another option is to take the employees who had previously performed the now outsourced activity and re-tool their skills into those that truly increase shareholder value, like sales or operations.

BPO is really a good fit for companies that lack skills to perform a particular process or would like the process performed better; and for businesses that want to operate lean and mean to avoid the costs and hassles of having excessive head count.

The best time to employ BPO is when the owner or key manager is handling many of the routine non-core tasks instead of generating sales or improving operational efficiency. After all, that's what helps a business grow.