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  • 1. BPO
  • 2. Agenda • • • • • • What is BPO? Categories. Key Terms. Rule to Follow. BPO to India. Pros and Cons.
  • 3. What is BPO? • Business process outsourcing (BPO) is the contracting of a specific business task, such as human resources and customer service, to a third-party service provider. • This allows companies to focus on their core business processes. • BPO is implemented as a cost-saving measure for tasks that a company requires.
  • 4. BPO Categories • It is often divided into two categories: - Back Office Outsourcing which includes internal business functions such as billing or purchasing. - Front Office Outsourcing which includes customer-related services such as marketing or tech support.
  • 5. Key Terms • Key Terms: - Offshore Outsourcing is BPO that is contracted outside a company's own country. - Nearshore Outsourcing is BPO that is contracted to a company's neighboring country. - Onshore Outsourcing is BPO that is contracted with the company's own country.
  • 6. Rules to Follow: What to Outsource • Processes that do not add value to a product or service. • Highly repeated tasks with little variation. • Labor intensive tasks that do not require a companies intellectual property nor core competencies. • Processes that will tie up large amounts of capital in assets.
  • 7. Rules to Follow: What Not to Outsource • Processes that incorporate your core competencies. • Processes that require access to intellectual property of your company. • Non-labor intensive tasks. • Processes that are associated with the image of your company.
  • 8. Rules to Follow: BPO Guidelines • There are many BPO providers, so research to find the one that best suits your needs. • Using one provider for multiple tasks will help streamline your BPO. • Have some measure to check and control the output of your BPO. • Communicate with your BPO.
  • 9. BPO to India
  • 10. BPO to India • Indian revenues from BPO are • • estimated to have grown 107% to $ 583 million. Leading Competitors: - Philippines, Mexico, Canada, China and Ireland. 67-72% of costs to call centers operating in the US/UK is directly linked to man power costs. India only spends 33-40% of costs on man power. This includes training, benefits and other incentives for labor.
  • 11. Statistics of the Future The main revenue areas for Indian BPO companies. India's BPO Market in 2008 Service Line First Estimate (1999) Second Estimate (2001) HR 5.4 3.5-4.0 Customer Care 4.1 8.0-8.5 Payment Services 2.9 3.0-3.5 Content Development 2.6 2.5-3.0 Administration 1.3 1.5-2.0 Finance 0.7 2.5-3.0 Figures in $ billion Indian revenues from BPO are estimated to have grown 107 per cent to $ 583 million.
  • 12. Statistics of the Future Comparisons of India vs US BPO Costs US$ Cost per FTE (Full Time Employee) Personnel United States India India as % of US costs 42,927 6,179 14% G&A Expense 8,571 1,000 12% Telecom 1,500 2,328 155% Property Rentals 2,600 847 33% Depreciation 3,000 1,500 50% 58,598 11,854 20% TOTAL EXPENSES
  • 13. 2012…
  • 14. 2012…
  • 15. Capabilities: Why go to India? • Language • – Major attraction for Multinationals – Advantage over competitors Educated Employees – Large number of qualified workers – Proven to be the best in the IT and computer software fields • Strong technical skills • Eagerness to engage clients – Produce around 100,000 engineers annually
  • 16. Capabilities: Why go to India? • Infrastructure • – Improvements have led to increasing success • Telecom facilities • Power sector • India as a whole Government – Realize potential for economic development – Favorable policies have turned India into a BPO/IT hub. • Examples: Investment promotion, telecom policy, IT Act
  • 17. Pros of BPO • • • • • • English Language Proficiency Skilled Workforce Lower Wages Flexibility in Working Hours Suitable Human Resources Large Number of Graduates
  • 18. Cons of BPO • No TCO based costs (While total cost of ownership (TCO), a summary of all tangible costs associated with a BPO contract, is still a near universal tool used by BPO buyers when assessing a potential contract, BPO buyers are beginning to look beyond TCO into intangible, non-linear factors associated with outsourcing relationships.) • • • • • Poor Infrastructure Cultural Differences Internal competition for resources Rising labour costs Political and religious instability
  • 19. Conclusion • As a manager! – Allows company to focus on core competencies. – What the future lies. – Attractiveness of India.
  • 20. Sources • BPO India: Business Process Outsourcing. • • • • • http://www.bpoindia.org/ Forbes Magazine: Business Process Outsourcing. http://www.forbes.com/bow/b2b/industry.jhtml?id=38 Why India? http://www.indobase.com/bpo/why-india/index.html InformationWeek: Indian Outsourcers Grow Fast, Gain Prominence.  http://www.informationweek.com/story/showArticle.jhtml?articleID=53701018 CIO Definitions: http://searchcio.techtarget.com/sDefinition/0,,sid19_gci928308,00.html BPO service India: Comparing India with other BPO destinations.  http://www.xicom.biz/bpo_swot_analysis.html