BPO & Its Effects On International Services Market

Submitted To Miss Tarannum

Submitted By Nishu Kansal MBA-1 Roll No-119

Introduction 

Business process outsourcing (BPO) is a subset of outsourcing that involves the contracting of the operations and responsibilities of specific business functions (or processes) to a third-party service provider. Garner Dataquest defines business process outsourcing as the delegation of one or more IT-intensive business processes to an external provider who, in turn, owns, administrates and manages the selection processes based on defined and measurable performance metrics. 

BPO brings together three components 
Technology Business processes Expertise

.

Need for outsourcing The lack of existing skills to complete a process To replace a poor internal service (may not be connected to lack of skills) Resources are not available in house to complete the process The process is difficult to manage (in general or due to business growth) The process may be performed better and cheaper by other services Do not have to worry about continually introducing new technologies .

Skills and expertise to look in an outsourcing partner Infrastructure Global delivery capacity Vertical market and process expertise Change management Project management and outsourcing relationship management expertise .

COMPETITION REVENUE MAXIMIZATION ADVANCE TECHNOLOGY MORE CONCENTRATION SIGNIFICANCE OF BPO SATISSFYING CUSTOMER NEED IMPROVEMENT IN BUSINESS REDUCTION OF COST FLEXIBILITY .

. Outsourcing of maintenance services has become common place BPO produces the company risk exposure to changing technology and changing buyer preferences BPO streamlines company operations in ways that improve organizational flexibility cut cycle time speed decision making and reduce co-ordination costs. BPO allows company to concentrate on its core business and do what it does best.Strategic aspect outsourcing of business process Business process outsourcing makes good strategic sense in a number of instances An activity can be performed better or more cheaply by outside specialists The activity is not crucial to the firms ability to achieve sustainable competitive advantage and wont hollow out its core competencies capabilities or technical know-how.

Services offered by BPO units Customer service and sales Finance and accounting Financial services Insurance an ing Securit dministration .

call centers  Non-voice BPO .Types of BPO BPO can be classified as :  Voice BPO i.e.

. card services. regardless of how they are organized or what types of transactions they handle. multilingual customer support. telemarketing. help desks. refers to a voice operations environment includes customer support. information lines or customer service centers. directory assistance. operator services. credit services.Call Centers    A call center is an umbrella term that refers to reservations centers. interactive voice response and web-based services.

Various types of call centre's Inbound call centre's Outbound call centre's Web enabled call centre's CRM call centre's Phone call centre's .

Voice BPO services     Customer Support Services Technical support services Telemarketing Services Employee IT Help-desk Services .

mining and/or management Shared Services .g. storage Website design & development Document management Business Continuity/ DR Billing services General Accounting Accounts payable Accounts receivable Financial Reporting Auditing and Compliance Tax Asset Management Securities Debt Collection Compensation and payroll services Hiring and Recruitment Workforce Training and development Performance management Direct and Indirect procurement and purchasing Tender management Supply chain management Legal services Transcription and Translation Healthcare & Pharmaceutical / Drug Management R&D Data analytics. hosting.TYPICAL BPO FUNCTIONS Business Process CRM Services / Call Centres IT Services Finance & Accounting Services Human Resource Services Procurement Services Other Specialist Services / KPO Customer service Telesales Market Research & Promotion Customer support Customer research and surveys (customer feedback) Outbound data capturing and data cleaning Web marketing IT Helpdesk Emergency Services Network management and maintenance Application Development Implementation services Packaged application outsourcing Infrastructure outsourcing e.

. which are outsourced and are not related to direct telephonic or response services.Non-voice BPO These are the Business Processes.

Non-Voice BPO Services Data Entry Services/Data Processing Services  Data Conversion Services  Scanning. OCR with Editing and Indexing Services  Book Keeping and Accounting Services  .

BPO INCLUDES Call centre's Medical transcription Content development Insurance claims processing Data conversion Back office operations Deposition summary Geographical information systems .

will be To market the size Rate of market growth for firm Complexity in manufacturing its product Introduction of new product based on technologies The emergence of competent supply sources Willingness of the company to adopt practices Ways for effective outsourcing To move towards development of cooperatives Long term buyer supplier relationship Strategic long term partnerships.KEY FACTORS THAT WILL DETERMINE WHETHER THE COMPANY SHOULD actually GO FOR OUTSOURCING . .

Industry Size  India has revenues of US$10. but a commanding 63% share of the offshore component. China is also trying to grow from a very small base in this industry. other locations like Philippines.   . This 63% is a drop from the 70% offshore share that India enjoyed last year: despite the industry growing 38% in India last year. while the BPO industry is expected to continue to grow in India. its market share of the offshore piece is expected to decline.9 billion from offshore BPO and US$30 billion from IT and total BPO (expected in FY 2008). and South Africa have emerged to take a share of the market. However. India thus has some 5-6% share of the total BPO Industry.

Continued«. 8-10 telecoms. of which: 35-40 retail banking. Wipro BPO. the global "addressable" BPO market is worth $122 ± $154 billion.  .  According to management consultancy McKinsey & Co... 8 pharma. 25-35 insurance. and Aegis Ltd. 10-12 travel/hospitality. TCS BPO. 10-15 others and 2-5 is finance. accounting and HR. WNS Global Services. The top five Indian BPO exporters for 2009-2010 according to NASSCOM are Genpact. 10-12 auto.

Also labor costs are low but proficiency in English is poor and skill levels vary. . Thus scalability is major concern.Low cost BPO destinations in the world PHILLIPPINES Cost savings are about 30-50% over the US operations but wages are more than 12% in India CANADA Canada's advantage is low real estate prices and salaries as compared to US but they are as compared to India BRAZIL AND MEXICO They are having an adage because their time zones are similar to the US and close to US.

CHINA China¶s greatest strength is low cost labor [similar to India} which attracts more companies with high volume work and transaction based business process. SOUTH AFRICA South Africa is emerging as a hot BPO destinations because it has a time zone compatible with Europe and a 17 million strong labor pool {compared to India's 270 million} the government support to BPO activities and a robust English based education system are attractive propositions for US firms to move to this nation .

Outsourcing in India----A SWOT analysis Strength A huge pool of computer literate graduate manpower Cost effectiveness workforce Second largest English speaking populations Geographical location and the resultant time difference encouraging attitude of the government Tax incentives Attrition rate is lower .

Weakness Infrastructure bottlenecks Poor telecom facilities in country could scuttle the tele-work opportunity Security concerns bottlenecks Telecom is not fully liberalized in India call centers are dependent on dot only for providing connection to the international IPLC There are certain procedural bottlenecks such as± getting clearances and local loops set-up is a major challenge. . Opportunity World bank confirmed India as their number one choice of vendors for outsourcing compared to other Asian counterparts More than 90% us companies outsource one or more activities.

82% of the us companies ranked India as their first choice for software outsourcing Of the 23 software companies in the world that have achieved the prestigious SEI-CMM level 5. Ireland china etc There are voices of discontent that are being heard in the us for instance a bill has been tabled in new jersey senate if passed might restrict the public companies from being outsourced to India . Philippines . 15 of them are Indian Threats A change in the curriculum in the universities and technical colleges is required Due to worldwide economic recession there is a possibility of cheaper destinations than India for BPO Competitions from other countries like Canada. Mexico.

small pool talent high costs Canada . Ukraine technology skills .Adding insult to the injury competition for BPO is getting hot between nations COUNTRY Philippines USP understand the US market low attrition voice work understand the us and high end skills time zone similar to Europe cost savings low costs LIMITATION more expensive than India .Ireland and Australia South Africa skill shortage China no English capability poor infrastructure. language Russia.

Companies are doing BPO or are not even planning to do so BPO staff will come from numerous sources BPO will evolve differently from ITO BPO expansion is going to be infinite .BPO Trends The BPO market is expanding BPO market is growing but not fast as expected Development of BPO depends on it outsourcing BPO has become more complex Technology management is moving into the hands of the process based management organizations.

FUTURE TRENDS .

the International Association of Outsourcing Professionals. T-Mobile UK. NelsonHall. Rapid and noise-free transition coupled with a deep understanding of client business drivers enabled Infosys BPO to add value to the T-Mobile's processes. Red Herring. This Case Study demonstrate clients focus to derive continued business value through collaborative partnership with Infosys BPO. The scope of the outsourcing initiative included various processes in the finance directorate. FAO Today. and others.CASE STUDY  Infosys BPO Client Perspectives: Realizing Business Value  Business Process Outsourcing subsidiary of Infosys Technologies.   . it is ranked among the leading BPO companies in India by NASSCOM. was set up in April 2002.the company formed with the merger of T-Mobile and Orange was looking to structurally reduce the cost of its business operations while retaining focus on its core activities. Lack of prior exposure to outsourcing and time constraints posed as major challenges. Dataquest. Today. a part of Everything Everywhere Limited .

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