Sap’s entrance in the Business process outsourcing market has created a revolution in the outsourcing industry. SAP is useful to many BPO companies like ACS, EDS and IBM. SAP has a large market share in human resources, procurement, finance and accounting outsourcing. SAP provides service to business process outsourcing (BPO) and human resource outsourcing (HRO).because of which the clients can benefit a lot as there costs can reduce, reduced risk and the quality of work is improved. The SAP Net Weaver software can help the BPO as their work can be done quickly. The SAP powered by BPO solutions helps both the organization and BPO. Choosing which process to outsource is becoming difficult for the company to select. It is a very important decision. The firms are trying to outsource transactional human resources, payroll processes, Finance, accounting, procurement and customer services. A reliable BPO partner can deliver high quality processes and cut costs. Before entering into a BPO contract the firm should know its process objectives, cost structure and the benefits that it can achieve. A BPO can be successful if it can develop the necessary organizational skills. The common problems faced in standards BPO is there is loss of flexibility, insufficient preparation and difficulties in measuring performance before and after the agreement. If the company can maintain a good BPO relationship it will increase its performance and shareholder value. A BPO is just not a service agreement but it is a long term relationship which can change the way you do your business. SAP software plays an important role in the development of the organization and BPO partner. BPO uses software like SAP Net Weaver and mySAP Business solutions. The SAP is trying to maintain a long term relationship between the organization and BPO providers so that they can enjoy high quality service. SAP is being used by many companies like Accenture for online learning solutions and financial service based on SAP solutions. ADP Global Employer Services offer outsource human resources solutions using mySAP ERP HCM solution. ARINSO International offer human resources solutions based on mySAP ERP HCM. Convergys provides HR-BPO solutions based on mySAP ERP HCM. Convergys serves 600 clients in nearly 40 countries. EDS is a HR-BPO company which also uses the mySAP ERP software. It provides service to small and large organizations. LogicaCMG offers human resources service and payroll services to its international clients. Lot of small and larger companies is outsourcing their non core activities to these companies. Managing a BPO is not a simple task as it has lot of risks. To deliver good results the service provider has to rely on sound business foundations like process automation and related technology. SAP can help the BPO in many ways such as integrated business solutions, in house processes, certified BPO partners that can handle the outsourcing needs. BPO with SAP solutions has major advantages like it has lower risk of transportation, operations, legal compliance and contract governance; it has lower cost during transition and evolution, lower ongoing total process cost and lower cost of keeping long term options open.