Business Process Business Process OutsourcingOutsourcing

What isWhat is Business Process Business Process Outsourcing?Outsourcing?

is a subset of is a subset of outsourcing that involves the  that involves the contracting of the operations and  of the operations and responsibilities of specific business functions responsibilities of specific business functions (or (or processes) to a third-party service provider. ) to a third-party service provider. Originally, this was associated with Originally, this was associated with manufacturing firms, such as  firms, such as Coca Cola that  that outsourced large segments of its supply chain. outsourced large segments of its supply chain. In the contemporary context, it is primarily In the contemporary context, it is primarily used to refer to the outsourcing of business used to refer to the outsourcing of business processing services to an outside firm, processing services to an outside firm, replacing in-house services with labor from an replacing in-house services with labor from an outside firm.outside firm.

BPO is categorized into BPO is categorized into back office back office outsourcingoutsourcing, and , and front office front office

outsourcingoutsourcing Back Office Back Office

OutsourcingOutsourcingwhich include internal which include internal

business function business function such as:such as:

Human Human ResourceResource

FinanceFinance AccountingAccounting

Front Office Front Office OutsourcingOutsourcing

which include customer which include customer related services such as:related services such as:

Contact Center Contact Center ServicesServices

BPO- TypesBPO- Types

There are three types of BPO.There are three types of BPO.

Offshore Outsourcing Onshore Outsourcing Nearshore Outsourcing

BPO that is contracted outside a BPO that is contracted outside a company's country is called company's country is called 

offshore outsourcing.. What is offshore outsourcing?What is offshore outsourcing?

is the practice of hiring an external is the practice of hiring an external organization to perform some business organization to perform some business functions in a country other than the one functions in a country other than the one where the where the products or  or services are actually  are actually developed or manufactured is the practice developed or manufactured is the practice of hiring an external organization to of hiring an external organization to perform some business functions in a perform some business functions in a country other than the one where the country other than the one where the products or  or services are actually developed  are actually developed or manufactured.or manufactured.

There are 4 basic types of OFFSHORE There are 4 basic types of OFFSHORE

OUTSOURCING:OUTSOURCING: ITOITO — Information Technology Outsourcing — Information Technology Outsourcing BPOBPO — Business Process Outsourcing covers — Business Process Outsourcing covers

things like running call centers, processing things like running call centers, processing insurance claims. insurance claims.

Software R&D Software R&D — offshore software development— offshore software development KPOKPO - Knowledge Process Outsourcing covers - Knowledge Process Outsourcing covers

things that require a higher skill set such as things that require a higher skill set such as reading X-Raysreading X-Rays,, performing investment performing investment research on stocks and bondsresearch on stocks and bonds,, handling the handling the accounting functions for a business or accounting functions for a business or executing engineering design projectsexecuting engineering design projects. .

BPO that is contracted with BPO that is contracted with company's own country is called company's own country is called 

onshore outsourcing.. What is offshore outsourcing?What is offshore outsourcing?

Onshore outsourcing (also called Onshore outsourcing (also called domestic outsourcing) is the domestic outsourcing) is the obtaining of services from someone obtaining of services from someone outside a company but within the outside a company but within the same country. Also see same country. Also see offshore outsourcing, the obtaining , the obtaining of services from people or of services from people or companies outside the country. companies outside the country.

BPO that is contracted to a company's BPO that is contracted to a company's neighboring (or nearby) country is neighboring (or nearby) country is

called called nearshore outsourcing What is nearshore outsourcing?What is nearshore outsourcing?

NearshoringNearshoring is "the transfer of business or  is "the transfer of business or IT processes to companies in a nearby IT processes to companies in a nearby country, often sharing a border with your own country, often sharing a border with your own country", where both parties expect to benefit country", where both parties expect to benefit from one or more of the following dimensions from one or more of the following dimensions of proximity: of proximity: geographicgeographic, , temporal temporal (time (time zone), zone), culturalcultural,, linguistic linguistic,, economic economic, , politicalpolitical, or , or historical linkageshistorical linkages. The service . The service work that is being sourced may be a work that is being sourced may be a business process or software development.  or software development.

There are some sub-segments There are some sub-segments of business process of business process outsourcing industry.outsourcing industry. Knowledge process outsourcingKnowledge process outsourcing (KPO)  (KPO)

is a form of outsourcing, in which is a form of outsourcing, in which knowledge-related and information-knowledge-related and information-related work is carried out by workers in related work is carried out by workers in a different company or by a subsidiary of a different company or by a subsidiary of the same organization, which may be in the same organization, which may be in the same country or in an offshore the same country or in an offshore location to save cost.  KPO firms, in location to save cost.  KPO firms, in addition to providing expertise in the addition to providing expertise in the processes themselves, often make many processes themselves, often make many low level business decisions—typically low level business decisions—typically those that are easily undone if they those that are easily undone if they conflict with higher-level business plans. conflict with higher-level business plans.

Legal Process OutsourcingLegal Process Outsourcing (also known  (also known as LPO) refers to the practice of a law as LPO) refers to the practice of a law firm or corporation obtaining legal support firm or corporation obtaining legal support services from an outside law firm or legal services from an outside law firm or legal support services company. LPO providers support services company. LPO providers have established themselves have established themselves in Canada, India, the Philippines, in Canada, India, the Philippines, the US, Israel and Latin America. They the US, Israel and Latin America. They traditionally offer services in the areas of traditionally offer services in the areas of document review, legal research and document review, legal research and writing, drafting of pleadings and briefs, writing, drafting of pleadings and briefs, and patent services outsourcing. and patent services outsourcing.

Why BPO is gaining Why BPO is gaining ground?ground?Few of the motivation factors are:Few of the motivation factors are: Factor Cost AdvantageFactor Cost Advantage Economy of ScaleEconomy of Scale Business Risk MitigationBusiness Risk Mitigation Superior Competency Superior Competency Utilization Improvement Utilization Improvement

Different Types of services Different Types of services being offered by BPObeing offered by BPO Customer Support ServicesCustomer Support Services Technical Support ServicesTechnical Support Services Telemarketing ServicesTelemarketing Services Employee IT Help-desk ServicesEmployee IT Help-desk Services Insurance ProcessingInsurance Processing Policy Maintenance/ Management:Policy Maintenance/ Management: Data Entry Services/Data Processing ServicesData Entry Services/Data Processing Services Scanning, OCR with Editing & Indexing Scanning, OCR with Editing & Indexing

ServicesServices Internet/ Online/ Web ResearchInternet/ Online/ Web Research

Advantages of BPOAdvantages of BPO Cost reductionsCost reductions- Cost reduction is done through process improvements, - Cost reduction is done through process improvements,

reengineering and use of technologies that reduce and bring administrative reengineering and use of technologies that reduce and bring administrative and other costs under control.and other costs under control.

Concentration on core businessConcentration on core business- With the day-to-day back office operations - With the day-to-day back office operations taken care of, the management is free to concentrate more on the core taken care of, the management is free to concentrate more on the core business of the company.business of the company.

Outside expertisOutside expertise- Company is saved from the hassles of recruiting and e- Company is saved from the hassles of recruiting and training personnel. BPOs ensure that experts from another company provide training personnel. BPOs ensure that experts from another company provide the needed guidance and skills.the needed guidance and skills.

Cater to changing customer demandsCater to changing customer demands- It is another great advantage of out - It is another great advantage of out sourcing the business processes. Many BPOs provide the management with sourcing the business processes. Many BPOs provide the management with flexible and scalable services to meet the customers' changing requirements, flexible and scalable services to meet the customers' changing requirements, and to support company acquisitions, consolidations, and joint ventures.and to support company acquisitions, consolidations, and joint ventures.

Revenue increase-Revenue increase- As stated above, by outsourcing non-core processes,  As stated above, by outsourcing non-core processes, companies can concentrate on increasing their sales and market share, companies can concentrate on increasing their sales and market share, develop new products; spread out into new markets and increase customer develop new products; spread out into new markets and increase customer service and satisfactionservice and satisfaction

Disadvantages of BPODisadvantages of BPO

Odd working hoursOdd working hours Health issuesHealth issues Abusive clientsAbusive clients Age factorAge factor Social issues/ alcohol Social issues/ alcohol

consumption/sexconsumption/sex Future trend of call center jobsFuture trend of call center jobs

Why peopleWhy people

Prefer BPO…Prefer BPO…

Did not get a better Did not get a better jobjob

Find nothing better to Find nothing better to dodo

Education level Education level doesn’t matterdoesn’t matter

Good work Good work environmentenvironment

Good BenefitsGood Benefits Flexibility of timeFlexibility of time Attractive life styleAttractive life style Transport facilityTransport facility

Leave BPO…Leave BPO…

No growth opportunity/ No growth opportunity/ lack of promotionlack of promotion

For higher SalaryFor higher Salary For Higher educationFor Higher education Misguidance by the Misguidance by the

companycompany Policies and Policies and

procedures are not procedures are not conduciveconducive

Physical strainsPhysical strains Uneasy relationship Uneasy relationship

with pears or managers with pears or managers