Agenda• What is BPO?• Categories.• Key Terms.• Rule to Follow.• BPO to India.• Pros and Cons.
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.
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.
Key Terms• Key Terms: - Offshore Outsourcing is BPO that is contracted outside a companys own country. - Nearshore Outsourcing is BPO that is contracted to a companys neighboring country. - Onshore Outsourcing is BPO that is contracted with the companys own country.
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.
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.
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.
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.
Statistics of the Future The main revenue areas for Indian BPO companies. Indias 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 $ billionIndian revenues from BPO are estimated to have grown 107 per cent to$ 583 million.
Statistics of the Future Comparisons of India vs US BPO CostsUS$ Cost per FTE(Full Time Employee) United States India India as % of US costsPersonnel 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%TOTAL EXPENSES 58,598 11,854 20%
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
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
Pros of BPO• English Language Proficiency• Skilled Workforce• Lower Wages• Flexibility in Working Hours• Suitable Human Resources• Large Number of Graduates
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
Conclusion• As a manager! – Allows company to focus on core competencies. – What the future lies. – Attractiveness of India.
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