The World Is Hilly

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Examining the Effects of Business Process Outsourcing Clusters On the Global Spread of Economic Activity

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  • The World Is Hilly

    1. 1. The World is Hilly © 2006, Jesse Kedy
    2. 2. Overview <ul><li>The Florida–Friedman Flaws </li></ul><ul><li>Are Economic Hills Important? </li></ul><ul><li>What is BPO? </li></ul><ul><li>Argument: What is Happening? </li></ul><ul><li>How is it Happening? </li></ul><ul><li>Examples & Proof </li></ul><ul><li>Future of BPO </li></ul>© 2006, Jesse Kedy
    3. 3. Our World: Spiky or Flat? <ul><li>Florida </li></ul><ul><li>Peaks, Hills, and Valleys </li></ul><ul><li>Hills Support Peaks </li></ul><ul><li>Gravitational Pull </li></ul><ul><li>Friedman </li></ul><ul><li>Economic Playing Field </li></ul><ul><li>Levels of Competition </li></ul><ul><li>Individual Roles </li></ul><ul><li>Static “Snapshot”, not Trend </li></ul><ul><li>Innovation ≠ Development </li></ul><ul><li>Economic Activity: One-Way </li></ul><ul><li>Reason for ≠ Purpose of Hills </li></ul><ul><li>Too Forward-Looking </li></ul><ul><li>Relevance to Economic Development </li></ul><ul><li>Dependence of Tier 2 & Tier 3 Locations </li></ul>The Flaws © 2006, Jesse Kedy
    4. 4. Focus: Economic Hills <ul><li>Characteristics </li></ul><ul><li>“ Manufacture the world’s established goods” </li></ul><ul><li>“ Take its calls” </li></ul><ul><li>“ Support its innovation engines” </li></ul><ul><li>Importance </li></ul><ul><li>Free Up MNE Resources </li></ul><ul><li>Support Global Innovation in Spikes </li></ul><ul><li>Create Process Innovation </li></ul>© 2006, Jesse Kedy
    5. 5. Business Process Outsourcing (BPO) <ul><li>Interaction Level: </li></ul><ul><ul><li>Back Office </li></ul></ul><ul><ul><li>Middle Office </li></ul></ul><ul><ul><li>Front Office </li></ul></ul>Horizontal vs. Vertical © 2006, Jesse Kedy Low Complexity Middle-End Higher Complexity Data entry; Processing & Digitization Pre-publishing Website support Call centers; Reservations Customer service Tech support Finance; Accounting Insurance processing Loans/ Mortgage/ Tax processing Back-Office Services (Usually Horizontal) Front-office Services Back-Office Middle-Office (Industry-Specific)
    6. 6. Main Argument: What is Really Happening <ul><li>Some Economic Activity Flows Inward </li></ul><ul><ul><li>Related to Core Business </li></ul></ul><ul><ul><li>High Complexity/ Value-Added </li></ul></ul><ul><li>Other Activity Flows Outward </li></ul><ul><ul><li>BPO </li></ul></ul><ul><ul><li>Other Supporting Functions </li></ul></ul><ul><li>Relatively Faster Outward Movement ( from Spikes ) </li></ul><ul><li>Overall : Disparities will Decrease , not Increase </li></ul>© 2006, Jesse Kedy
    7. 7. How this is Happening <ul><li>Globalization : Commoditizing Capabilities </li></ul><ul><li>( Taking the R out of VRIO ) </li></ul><ul><li>MNE Goals : Sustained Competitive Advantage </li></ul><ul><li>MNE Focus : Increasing Rare / Unique Capabilities </li></ul><ul><li>Problem : Limited Resources </li></ul><ul><li>Solution : Eliminate Non-Core Activities </li></ul><ul><li>MNE Entrepreneurialism ( Cultural Shift ) </li></ul>© 2006, Jesse Kedy
    8. 8. Economic Spikes (Level 1) Large Hills (Level 2) Emerging Hills (Level 3) © 2006, Jesse Kedy
    9. 9. <ul><li>Openness to Diversity </li></ul><ul><li>Reliance on B2B Relationships </li></ul><ul><li>More Offshore BPO (to L-2) </li></ul><ul><li>More Secure Transactions & Reliability </li></ul><ul><li>BPO Provider Improvements </li></ul><ul><li>Sub-Contracting Low-End Processes (to L-3) </li></ul><ul><li>L-3 Areas – Specialization & Sophistication </li></ul><ul><li>Less Emigration from L-3 </li></ul><ul><li>L-2 Saturation  Need to Innovate </li></ul>Results of the Cultural Shift © 2006, Jesse Kedy
    10. 10. India’s BPO Clusters L-3 L-2 © 2006, Jesse Kedy
    11. 11. India’s BPO Clusters (cont)
    12. 12. The Future of BPO Clusters © 2006, Jesse Kedy
    13. 13. © 2006, Jesse Kedy
    14. 14. Questions © 2006, Jesse Kedy

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