business process outsourcing (BPO)

basicwidespread

Business process outsourcing means a company permanently entrusts a recurring back-office task, such as customer service or payroll, to an external provider.

In plain terms

Imagine a restaurant that does not wash its tablecloths itself but contracts with a laundry. The restaurant focuses on cooking, while the laundry washes cheaper and more expertly because this is their main business. Business process outsourcing does the same with office work: a company hands over a full task area to an external company specialized in it.

Typically, jobs that are essential but do not generate the company's revenue are outsourced: phone and chat customer service, accounting, payroll, invoice processing, recruitment, and data entry. The client saves costs and does not need to hire, train, or replace staff.

The emergence of AI agents affects this industry most directly, because much of the outsourced work consists of rule-based, repetitive, screen-based tasks. Service providers no longer sell only human labor hours: agents increasingly handle routine matters, while humans manage complex cases and oversight.

How it works

The company selects which process to outsource and specifies the task, the volume of cases, and the expected quality.
You sign a contract with a provider that includes measurable commitments: for example, how quickly a customer must be answered and what error rate is acceptable.
The provider takes over knowledge and access: it learns the rules, enters the client's systems, trains its own team, and sets up the agents.
From now on, the service provider handles the daily work with its own staff and software, even from another country.
The client monitors performance through regular reports and, if the agreed level is not met, may demand a penalty or switch providers.

An everyday example

You call your mobile provider or airline's customer service, and someone handles your matter in the company's name and system. It is quite possible that they are actually an employee of an external service center, and your initial questions were already answered by an AI agent.

Who is affected

employeeApproximately 100,000 people work in business service centers in Hungary. Some are external providers, while others are in-house centers of large corporations. Their tasks are transforming the fastest as agents take over routine work. → Work & HR

jobseeker, new graduateMany entry-level office jobs requiring language skills are in this sector, but the number of the simplest roles is decreasing. → Work & HR

entrepreneur, executiveYou must decide whether to keep a background process in-house, outsource it, or automate it with your own agents.

everyoneAs a customer, you talk to outsourced customer service day after day, and your data is often handled by such an external company.

A common misconception

MythOutsourcing always means the work moves to a distant, cheap country.

In realityOutsourcing means the work is done by another company, not that it is done abroad. The provider can be in the same city; Hungary is also a popular destination where Western companies bring such work.

Limits and risks

The task can be outsourced, but not the responsibility: if the provider makes a mistake or data leaks, the client is primarily responsible to the customer and authorities, even if the provider bears its own liability.
The promised savings can easily vanish in the costs of training, coordination, verification, and potential provider switching.
Over time, the company may lose knowledge of its own processes and become dependent on the provider.
If the provider deploys AI agents, it is worth asking what is handled by machine versus human, who verifies the result, and where the data goes.

Similar, but not the same

offshoring – Offshoring means the work moves to another country, even to the company's own office there, while outsourcing is defined by the work being done by another company.
temporary agency work – When renting, you get people you direct; when outsourcing, you order a finished result, and work organization is the provider's responsibility.
business process automation – Automation means software performs the work instead of a human, while outsourcing means another company performs it, either with a human or with software.

Related concepts

Broader

outsourcing, division of labor, business services

Narrower

outsourced customer service, knowledge process outsourcing, payroll outsourcing

On the edge

IT outsourcing, offshoring, service provider hub, business process automation, AI-agent, service-level agreement

A brief history

Outsourcing back-office processes spread among large corporations in the 1980s and 1990s, then became a global industry in the 2000s due to cheap telecommunications and the internet, led by India and the Philippines. Central Europe, including Hungary, became an important location for business service centers in the same period.

Where things stand

By the end of 2026, BPO is a mature industry employing millions worldwide, currently transforming: providers are replacing routine tasks with AI agents, and billing is increasingly based on completed cases or achieved results rather than hours worked.

Status: 2026 November

In the news

Appears in 2 Agent Age stories; the curve shows weekly occurrence in the news magazine.

Workday CEO says AI will replace outsourced jobs firstOct 14, 2026 · Work & HR
How AI is changing jobs in the Philippines' outsourcing industryAug 4, 2026 · Work & HR

Also known as

BPO · business process outsourcing · business process outsourcing · business process outsourcing · process outsourcing · BPO-szektor

This entry was machine-edited and has undergone machine expert review; the “In the news” section updates automatically from Agent Age stories.