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What is BPO ?
BPO or Business process outsourcing
is basically defined as transferring of non-chore jobs of a
company or an organization to an external entity, which
specializes in that particular field of expertise. it is
normally looked at as a cost cutting and a time saving measure.
Consider a company that is into development of banking software
products and services. Besides developing software it has to
look after the transportation, security and infrastructure needs
of the company which eats up sufficient amount of time and
resources. The company management which is already under severe
time constraints cannot afford to waste time on these trivial
but essential needs so they outsource these chores to another
organization which specializes in security and transportation
needs of software companies so that it can devote its full
energy and resources into its chore job that is software
development. this is where the business process outsourcing
companies come into picture.
What does BPO do ?
Outsourcing companies essentially take over management control
over a small segment of the mother company which are non
critical. Normally outsourcing involves segments like human
resource, security, advertising, infrastructure, maintenance and
support of company products.
Disadvantages of business process
outsourcing ?
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Although outsourcing has become
quite a popular phenomenon among large business enterprises it
has attracted a huge amount of negative publicity especially in
western countries as it is seen as a threat to American jobs
from third world countries like India, Pakistan and china.
Proponents of outsourcing to third world countries argued that
these countries provided cheap and quality labor, which makes
total business sense.
There is also criticism regarding
security issues concerning companies giving outside access to
sensitive customer information. In April of 2005, a high-profile
case involving the theft of $350,000 from four Citibank
customers occurred when Indian call center workers in Pune,
India, acquired the passwords to customer accounts and
transferred the money to their own accounts opened under
fictitious names. Citibank did not find out about the problem
until the American customers noticed discrepancies with their
accounts and notified the bank. However this kind of a security
compromise cannot be labeled as a fall out of outsourcing as
incidents like this even takes place in American call centers. |
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The BPO
in India
The business process outsourcing industry in India has made a
giant leap since its inception in the late nineties . Compared
to the nineties when this Industry had started inroads into the
United States with Outbound Tele-marketing campaigns,. The
business has boomed to the extent that many people are now
running BPO’s out of their cyber cafes and houses in New Delhi.
Also the bpo companies in India have gone up on the overall
value chain with the inclusion of several major Indian
industrial giants into the industry, which lead to a surge in
the exports to the international market. The domestic BPO market
did not stay behind boosted by demand from the telecom and
banking sectors, it matched the growth of BPO exports. The
market experienced maturity and consolidation, a result of
numerous mergers and acquisitions taking place within the
sector. There were over 400 companies operating within the
Indian BPO space, including captive units (of both MNCs and
Indian companies) and third-party services providers. Growth in
this sector will get a further impetus as Indian BPO companies
have robust security practices and emphasis is laid in
developing trust with clients on this score. While earlier there
were varying quality standards on this aspect, today there is
focus on standardization of security, such as data and IP
security.
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BPO in
Philippines
Philippines is another country which has seen a rapid boom in
the business process outsourcing industry during the last
decade. With over one lakh people working in this industry it
considered as the most serious rival to India in the global BPO
market. This is because of the fact that being a former American
colony the education system in this country is modeled along the
American education system giving the Filipino-English a neutral
or an almost American accent, an advantage in dealing with the
mostly American clientele.. the industry in the Philippines is
fueled mostly by customer care, medical transcription, software
development, animation, and shared services. Though customer
care call centers form the largest part of the BPO boom locally,
the Philippines' language proficient information technology,
human resource, and finance/accounting professionals are a
significant contributing factors in this.
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Types of
outsourcing
Nearshoring it involves
outsourcing business solutions to comparatively cheaper places while
being geographically closer to the mother company or the client. The
term was created and copyrighted by Softtek, a Mexican IT company
which provides near shore outsourcing to the US and the European
Union. Major near shoring destinations for US businesses are Mexico
and Canada, and in Western Europe, include Ireland, Eastern Europe
and the Maghreb.
Proponents of near sourcing argue that outsourcing to geographically
nearer countries helps in the sense that they have similar social
and cultural systems leading to lesser friction among the clients
and the service provider. For example, Germans would typically be
more comfortable working with a French person rather than with
someone from an Asian country, mainly for the stated reason of
cultural differences.
Outsourcing Off shoring is
defined as the complete shifting of certain operation to another
country especially one which is located very far away from the
particular country where core operations are being undergone. This
includes any business process such as production, manufacturing, or
services.
Off shoring can be seen in the context of either production off
shoring or services off shoring., China emerged as a prominent
destination for production off shoring. After its accession to the
WTO. Also with the development of telecom technology service off
shoring also came into being with India being the dominant player.
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Article Contributed By: Pinakjit
Kakati
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