Business Process

Outsourcing
 What is Business Process Outsourcing?

 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. Originally, this was associated
with manufacturing firms, such as Coca Cola that
outsourced large segments of its supply chain. In the
contemporary context, it is primarily used to refer to
the outsourcing of business processing services to an
outside firm, replacing in-house services with labor
from an outside firm.
BPO is categorized into back office outsourcing, and
front office outsourcing

 Back Office Outsourcing  Front Office Outsourcing

which include internal business which include customer related
function such as: services such as:

 Human Resource  Contact Center Services

 Finance
 Accounting
BPO- Types
 There are three types of BPO.

 Offshore Outsourcing
 Onshore Outsourcing

 Nearshore Outsourcing
 BPO that is contracted outside a company's
country is called offshore outsourcing.
 What is offshore outsourcing?
is the practice of hiring an external organization to
perform some business functions in a country other
than the one where the products or services are actually
developed or manufactured is the practice of hiring an
external organization to perform some business
functions in a country other than the one where
the products or services are actually developed or
manufactured.
 There are 4 basic types of OFFSHORE
OUTSOURCING:
 ITO — Information Technology Outsourcing
 BPO — Business Process Outsourcing covers things
like running call centers, processing insurance claims.
 Software R&D — offshore software development
 KPO - Knowledge Process Outsourcing covers things
that require a higher skill set such as reading X-Rays,
performing investment research on stocks and
bonds, handling the accounting functions for a
business or executing engineering design projects.
 BPO that is contracted with company's own
country is called onshore outsourcing.
 What is offshore outsourcing?
Onshore outsourcing (also called domestic
outsourcing) is the obtaining of services from
someone outside a company but within the same
country. Also see offshore outsourcing, the
obtaining of services from people or companies
outside the country.
BPO that is contracted to a company's neighboring
(or nearby) country is called nearshore outsourcing

 What is nearshore outsourcing?

Nearshoring is "the transfer of business or IT
processes to companies in a nearby country, often
sharing a border with your own country", where both
parties expect to benefit from one or more of the
following dimensions of proximity: geographic,
temporal (time zone), cultural, linguistic, economic,
political, or historical linkages. The service work that
is being sourced may be a business process or software
development.
There are some sub-segments of
business process outsourcing industry.
 Knowledge process outsourcing (KPO) is a
form of outsourcing, in which knowledge-
related and information-related work is carried
out by workers in a different company or by a
subsidiary of the same organization, which may
be in the same country or in an offshore
location to save cost. KPO firms, in addition to
providing expertise in the processes themselves,
often make many low level business decisions—
typically those that are easily undone if they
conflict with higher-level business plans.
 Legal Process Outsourcing (also known as LPO)
refers to the practice of a law
firm or corporation obtaining legal support services
from an outside law firm or legal support services
company. LPO providers have established themselves
in Canada, India, the Philippines,
the US, Israel and Latin America. They traditionally
offer services in the areas of document review, legal
research and writing, drafting of pleadings and briefs,
and patent services outsourcing.
Why BPO is gaining ground?
Few of the motivation factors are:
 Factor Cost Advantage
 Economy of Scale
 Business Risk Mitigation
 Superior Competency
 Utilization Improvement
Different Types of services being
offered by BPO
 Customer Support Services
 Technical Support Services
 Telemarketing Services
 Employee IT Help-desk Services
 Insurance Processing
 Policy Maintenance/ Management:
 Data Entry Services/Data Processing Services
 Scanning, OCR with Editing & Indexing Services
 Internet/ Online/ Web Research
Advantages of BPO
 Cost reductions- Cost reduction is done through process improvements,
reengineering and use of technologies that reduce and bring administrative
and other costs under control.
 Concentration on core business- With the day-to-day back office
operations taken care of, the management is free to concentrate more on the
core business of the company.

 Outside expertise- Company is saved from the hassles of recruiting and

training personnel. BPOs ensure that experts from another company provide
the needed guidance and skills.

 Cater to changing customer demands- It is another great advantage of out

sourcing the business processes. Many BPOs provide the management with
flexible and scalable services to meet the customers' changing requirements,
and to support company acquisitions, consolidations, and joint ventures.

 Revenue increase- As stated above, by outsourcing non-core processes,

companies can concentrate on increasing their sales and market share,
develop new products; spread out into new markets and increase customer
service and satisfaction
Disadvantages of BPO
 Odd working hours
 Health issues
 Abusive clients
 Age factor
 Social issues/ alcohol consumption/sex
 Future trend of call center jobs
Why people
Prefer BPO…
 Did not get a better job
 Find nothing better to do
 Education level doesn’t
matter
 Good work environment
 Good Benefits
 Flexibility of time
 Attractive life style
 Transport facility
Leave BPO…
 No growth opportunity/ lack
of promotion
 For higher Salary
 For Higher education
 Misguidance by the company
 Policies and procedures are
not conducive
 Physical strains
 Uneasy relationship with
pears or managers