Submitted by Erica
The term Business Process Outsourcing has achieved a wide meaning with the advent of the Information technology. Servicing industry is mainly dependent on this pillar which leverages the technical and analogical resources available to curb the rising demands of the industry. The most common examples of BPO’s are call centers, human resources, accounting, and payroll outsourcing. It may also use offshore resources. It includes the software’s, process management and the people to operate it.

Business Process Outsourcing history

This term crept into the global business vocabulary in mid 1980’s after the great revolution in the IT sector which vouched for the changes in strategies and goals and also struggled for the means to achieve them. Business houses generally vouch for this method to curb the costs of labour, technology, capital and resources. Outsourcing means transferring or sharing the decision making of a business function to an outsider and it involves a control of labour processes rather than entering in contracting relationships. The important segments of outsourcing include information technology, human resources, facilities and real estate management, and accounting. Call centres and customer service supports are also an important means of outsourcing for some companies.

Offshoring and offshore business process outsourcing

Outsourcing means transfer of organisational function to a third party.

Offshore outsourcing means transferring these organisational functions to the third party operating from the other country it does not necessarily include the internal organisational control.

Offshoring means transferring the organisational functions to the third party operating from the other country irrespective of the whether the work remains with the corporation or not.

Outsourcing is beneficial for a organisation to curb their production expenses at the cost of exploiting the labour and technological resources of the third party. It reduces the firm and customer costs and also induces the quality in products. Offshore outsourcing have paved the way for many businesses organisations to harvest the value of less labour costs and to exploit the value of less than par foreign currencies. During this method of dealing business strategies although due to less labour costs there might be some decrement in quality but it may boost the productivity which contributes to the upliftment of the country’s economical setup.

Criticisms

1. Quality : This is the most important question dealt by management and customers both as well globally. Managements talk in terms of the perservence of the quality on par with their existing standards due to which their products are controlling the consumer market. Customers talk in terms of quality of the products which they are buying as the substitute of the costly counterparts performing the same functions.
2. Economical imbalances : Although outsourcing may solve the problems related to the labour costs by helping the industries to gain more profits but it threatens to victimize the workforce of the nation contributing to the instability in the economy. This is the main issues faced by the developed countries where more business houses seek the outsourcing to expand their business ventures in lieu of less labour costs and other plum advantages.
3. Security concerns : This is also one of the main problems with the outsourcing regarding the security and confidentiality of the organizational details when they are transferred to a third party. Also the chances of fraud and misuse of resources are at high like faking the expense reports and all.

Developing Countries and Business Process Outsourcing

Business Process outsourcing has boosted the stagnant economies of the developing countries.

Philippines – Customer care, medical transcription, software development, animation, and shared services are the emerging industries in Philippines . Call centres are the booming factors of the economies world wide but it’s the excess of language proficient technology, human resource, finance professionals which gives Philippines the winning edge over other developing nations . And with the quality of the service this nation had managed to oust India from the list of the most favoured outsourcing destination. The other most contributing factors for this outsourcing boom in Philippines is the lowest labour costs which are $7 per day as compared to $10 in India and also there are many graduate people in Philippines who can adopt easily the American culture and be at ease with the slang.

India – Indian outsourcing industry began its first journey in mid 90’s by telemarketing for the American and other Europeans giants who wanted to expand their horizons to farther places.But today it has succesfully stepped into many sectors like call centres, human resources, information technology, medical transcription and financial consultancy services. Although the services were started primely in large cities but now to curtail the financial expenses this industry is now shifting its focus to small cities. The outsourcing have curbed with the issue of unemployment to the tee and have also boosted the economy of the country.

These are some of general terms associated with the Business Process Outsourcing

Offshore Product Development : This is considered a more extreme form of outsourcing as typically companies outsource their peripheral tasks which they do not consider core or strategic to their business. Like in Offshoring IT services where some countries can outsource their innovations and product development activities to other countries.

Nearshoring and inshoring : As offshoring involves relocation of the business to the lower cost destinations whereas Near shoring means relocation of business processes to (typically) lower cost foreign locations, but in close geographical proximity (e.g. shifting United States-based business processes to Canada/Latin America) whereas Inshoring means picking services within a company.

Bodyshopping : Means using the offshored products and personnel to do small disintegrated tasks within the business environment without any intention to outsource the entire business functions.

BPO services – Outsourcing the services to national and offshore destinations in order to gain revenues ,cost cuts and quality have gained a very wide acceptance globally. These are some of the processes that are outsourced like :

IT services

* Software development services
* Application development and management
* Re-engineering
* Conversion and migration (across platforms/ languages/ versions)
* Data warehousing and mining
* Embedded systems
* E-commerce applications
* Programming:- C, C++, VisualC++, Java, JavaScript, Java Beans, Java Server Pages (JSP), Enterprise Java Beans (EJB), ASP (Active Server Pages), Visual Basic
* Microsoft Access
* Novell Networking
* EDI and Integration
* Bar Coding and Hand Held Data Collection

Data Entry

* Data control audits
* Regular reporting of work systems
* Data entry software and validation tables
* Dispatch of data to the customer
* Double keyed data (when required by the customer)
* Proof checks
* PC hardware and services

BPO Insurances - Insurance industry is one of the largest and most regulated industries worldwide and has a host of associated legal and regulatory compliance including the Sarbanes Oxley Act. Insurance Industry is further highly paper intensive and deals with significant amounts of paperwork. Infact, almost 40% of personnel time is spent in managing insurance documentation. This along with pressures to reduce costs, improve service levels and focus on core competence is forcing Insurance Companies to look at outsourcing. Generally via the outsourcing BPO’s offers insurance outsourcing in field of claims processing, Policy administration, new business acquisition, billing and payments etc.

As BPO has a very wide application and it almost embodies the entire business definition in itself and is the topic of wide research for the intellectuals studying about the impact of globalization.
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