Competition and shareholder expectations are driving U.S. companies to reduce operating costs and focus on core competencies. To accomplish this, organizations are turning to business process outsourcing (BPO). Business process outsourcing is the practice of turning over the operation of an internal business process, like customer care or transaction processing, to a third party service provider.

Service providers leverage their process expertise, resources and ability to scale. The client company ("client") manages and compensates the service provider by defining measurable performance metrics and then evaluating the service provider's performance using those metrics. Service providers can be located onshore, near shore or offshore. Companies assessing a service provider must take location into consideration, as differences in culture, language, and technical infrastructure will affect price and performance levels and raise issues like process management and security.

BPO can be executed through several business models depending on the process and the company's business goals.

• Conventional outsourcing: where a company contracts with a service provider for services over a defined time period
   
• Joint ventures: where a U.S.-based company partners with an offshore company to provide outsourcing services to the U.S.-based company and/or third parties
   
• Build Operate Transfer (BOT): where a U.S.-based company engages with a service provider to establish an offshore facility, hire and train employees, transition the onshore process to the offshore operation and then run the facility and manage the workforce. The U.S. Company then has the option, after a pre-defined time period, to purchase the offshore operation.

Recent technology improvements have made geographical barriers far less formidable and enabled offshore service providers to compete head-to-head with onshore and near shore providers. Submarine fiber optic cable provides significant bandwidth for moving voice and data around the world.