With time, every industry starts following certain best practices as it develops and matures. The best practices followed in the BPO industry include:
•Companies outsource critical but non-core business processes that are not strategic to the firm's vision.
•An inefficient process is not outsourced to a third party vendor without any re-engineering.
•Companies gather support from its employees before taking the outsourcing plunge. The first step towards this is early communication of the outsourcing decision to the employees and even the shareholders.
•Sourcing advisors are consulted for negotiating a deal.
•Vendor is selected based on various criteria such as quality commitment, cost, transparency of operations, data security, etc.
5.5 BPO Drivers and Inhibitors
The advantages offered by outsourcing in general are valid for BPO as well, and these advantages act as internal drivers for BPO. In addition to these internal drivers, companies are lured to choose the BPO option due to the following external drivers:
•Robust IT and telecommunications infrastructure: The developments in IT and telecommunications infrastructure has enabled companies to transfer data to any place in the world instantaneously at very little cost. This infrastructure also allows them to increase their ROI and shareholder value.
•Pressure to lower costs: Companies are facing huge competition from their competitors to provide better services, and at the same time lower their costs. Companies are constantly innovating the way they are conducting businesses and BPO allows them to partner with external specialized vendors for efficient operations. Offshore BPO is cheaper than onshore BPO and many companies are now moving their operations to offshore locations, India being the most preferred destination.
•Little infrastructure for automation: The IT revolution has not achieved success in automating business processes and most of the business processes still need human labor for productive delivery. In such a scenario, resorting to BPO, which provides human labor at a lower cost, enables companies to maximize their ROI.
The perceived risks of outsourcing act as a big inhibitor for BPO. Some of these risks have been described below:
•Loss of control: Companies perceive the risk of losing control over the operations of their processes. Also, if the (trained) employees in the vendor firm leave the job, the buyer may be at risk.
•Financial instability of the vendor: If the vendor becomes financially unstable in some years, the buyer will have to search another vendor; the operations being at risk, if it does not search the new vendor fast.
•Loss of expertise: Customers may lose the expertise and knowledge of carrying out the outsourced processes with time.
•Data security: Data confidential to the customer may be prone to theft if the vendor firm does not have stringent security policies.
Friday, January 16, 2009
What constitutes BPO
BPO deals mainly with non-core processes of an organization. Some of these processes have been briefly explained below.
•Administrative support: Outsourcing of administrative support functions includes data entry, document conversion, forms processing, document scanning, indexing, secretarial tasks support, etc.
•Customer relationship management: Customer service outsourcing includes outsourcing of functions such as customer support, order taking, customer service, product support, technical help desk, collections and market research. Refer to the report on Customer Service Outsourcing for more details.
•Document processes: Document process outsourcing includes outsourcing of customer facing, technical, marketing and communications, financial accounting, and regulatory compliance documents.
•Finance and accounting: Finance and accounting outsourcing includes services such as internal auditing, time and expense management, travel expenses, credit and debt analysis, collections, invoicing, accounts payable, accounts receivable and billing-dispute resolution.
•Human resources and training: Human resources (HR) is one of the most critical assets of a company and companies need to carry out various tasks such as recruitment, training, attrition/retention, database management, contract-worker management, etc., for their employees. Carrying out these tasks through an internal HR department is costly and diverts the attention of the management from its core business issues. Hence, companies are now resorting to HR outsourcing big time.
•Intellectual property research and documentation: Outsourcing in intellectual property research and documentation includes filing and drafting of patent applications, prior art research, licensing support, and patent portfolio analysis.
•Legal services: Legal process outsourcing (LPO) involves consulting, research, transcription, documents management, billing, translation and other administrative and secretarial support services required for various legal functions such as commercial litigation, arbitration and mediation, appeals, government contracts, legal risk evaluation, etc.
•Medical transcription: Medical transcription is writing down medical records dictated by physicians and other healthcare professionals. These records include patient history and physical reports, clinic notes, therapeutic procedures, clinical course, diagnosis, prognosis, discharge summaries, etc.
•Payroll maintenance and other transaction processing: This segment includes payroll, payment, check, credit card and stock trade processing. Forester research predicts transaction processing to be a large segment within the BPO industry soon, with a market size of USD 58 billion in 2008. Some vertical processes such as mortgage, loans and insurance claims processing are also being outsourced.
•Product development: Companies need to constantly innovate to remain competitive in the market. With the increasing specialization of expertise required to carry out product development, companies choose to outsource their R&D functions to vendors who have expertise in a given field. Over the past few years, numerous MNCs have initiated offshoring R&D to other countries including India which is emerging as a hub for R&D outsourcing.
•Publishing: Publishing outsourcing involves outsourcing of publishing functions such as book design, book digitization, e-publishing, drawings and graphics, indexing, journal administration, etc.
•Research and analysis: Companies require data and its analysis for making informed strategic decisions. These companies have started outsourcing their research and analysis requirements to vendors who specialize in typical research and analysis work such data analytics, financial analytics, market research, secondary research, primary research, industry overview, competitive intelligence, etc.
•Sales and marketing (including telemarketing): Sale and marketing outsourcing involves delegating parts of sales and marketing functions such as cold calling, email pitches, telephone surveys, lead generation, lead qualifying, appointment setting, sales team management, etc.
•Security: Companies have to search for new technologies and employ qualified security professionals to keep their data secure from theft. Maintaining these resources and implementing a fool-proof security policy is a difficult task which can be better handled by experienced third party security agencies. Security outsourcing involves management of investigative services, physical security, electronic security systems, computer and network security, etc.
•Supply chain management: Outsourcing in supply chain management involves logistics, procurement, warehouse management, contract management, supply chain relationship management, etc
•Administrative support: Outsourcing of administrative support functions includes data entry, document conversion, forms processing, document scanning, indexing, secretarial tasks support, etc.
•Customer relationship management: Customer service outsourcing includes outsourcing of functions such as customer support, order taking, customer service, product support, technical help desk, collections and market research. Refer to the report on Customer Service Outsourcing for more details.
•Document processes: Document process outsourcing includes outsourcing of customer facing, technical, marketing and communications, financial accounting, and regulatory compliance documents.
•Finance and accounting: Finance and accounting outsourcing includes services such as internal auditing, time and expense management, travel expenses, credit and debt analysis, collections, invoicing, accounts payable, accounts receivable and billing-dispute resolution.
•Human resources and training: Human resources (HR) is one of the most critical assets of a company and companies need to carry out various tasks such as recruitment, training, attrition/retention, database management, contract-worker management, etc., for their employees. Carrying out these tasks through an internal HR department is costly and diverts the attention of the management from its core business issues. Hence, companies are now resorting to HR outsourcing big time.
•Intellectual property research and documentation: Outsourcing in intellectual property research and documentation includes filing and drafting of patent applications, prior art research, licensing support, and patent portfolio analysis.
•Legal services: Legal process outsourcing (LPO) involves consulting, research, transcription, documents management, billing, translation and other administrative and secretarial support services required for various legal functions such as commercial litigation, arbitration and mediation, appeals, government contracts, legal risk evaluation, etc.
•Medical transcription: Medical transcription is writing down medical records dictated by physicians and other healthcare professionals. These records include patient history and physical reports, clinic notes, therapeutic procedures, clinical course, diagnosis, prognosis, discharge summaries, etc.
•Payroll maintenance and other transaction processing: This segment includes payroll, payment, check, credit card and stock trade processing. Forester research predicts transaction processing to be a large segment within the BPO industry soon, with a market size of USD 58 billion in 2008. Some vertical processes such as mortgage, loans and insurance claims processing are also being outsourced.
•Product development: Companies need to constantly innovate to remain competitive in the market. With the increasing specialization of expertise required to carry out product development, companies choose to outsource their R&D functions to vendors who have expertise in a given field. Over the past few years, numerous MNCs have initiated offshoring R&D to other countries including India which is emerging as a hub for R&D outsourcing.
•Publishing: Publishing outsourcing involves outsourcing of publishing functions such as book design, book digitization, e-publishing, drawings and graphics, indexing, journal administration, etc.
•Research and analysis: Companies require data and its analysis for making informed strategic decisions. These companies have started outsourcing their research and analysis requirements to vendors who specialize in typical research and analysis work such data analytics, financial analytics, market research, secondary research, primary research, industry overview, competitive intelligence, etc.
•Sales and marketing (including telemarketing): Sale and marketing outsourcing involves delegating parts of sales and marketing functions such as cold calling, email pitches, telephone surveys, lead generation, lead qualifying, appointment setting, sales team management, etc.
•Security: Companies have to search for new technologies and employ qualified security professionals to keep their data secure from theft. Maintaining these resources and implementing a fool-proof security policy is a difficult task which can be better handled by experienced third party security agencies. Security outsourcing involves management of investigative services, physical security, electronic security systems, computer and network security, etc.
•Supply chain management: Outsourcing in supply chain management involves logistics, procurement, warehouse management, contract management, supply chain relationship management, etc
Business process outsourcing basics:
Business process outsourcing (BPO) contains the transmission of processes along with the associated operational activities and responsibilities, to a third party with at least a guaranteed equal service level and where the client contains a firm grip over the (activities of the) vendor for mutual long term success. BPO is positively related to the search for more efficient organizational designs: cost reduction, productivity growth and innovative capabilities. Hence, a source for strategic advantage.
In the early days, BPO usually consisted of outsourcing processes such as payroll. Then it grew to include employee benefits management. Now it encompasses a number of functions that are considered "non-core" to the primary business strategy.
Traditionally, BPO is undertaken by manufacturing firms. However, BPO is nowadays rapidly conquering the service oriented firms as well. A well-known example is provided by the Bank of America, who outsourced their entire HR function to Exult, one of the leading Human Resources BPO vendors.
Business process outsourcing is fast becoming the best option of most large-scale companies and businesses. Outsourcing is defined as the process of delegating a certain task or business operation to a third party provider instead of having it done inside the company or institution. If the job is passed on to another country, it becomes offshore outsourcing. Companies engage in offshore outsourcing to further cut the estimated production costs. Although this concept looks good from a vintage point, the problems of business process outsourcing are worth analyzing first
BPO is often divided into two categories:
• Back office outsourcing: which includes internal business functions such as billing or purchasing, and front office outsourcing, which includes customer-related services such as marketing or tech support.
• Front Office Outsourcing : which includes customer-related services such as marketing or tech support.
offshore outsourcing:BPO that is contracted outside a company's own country is sometimes called offshore outsourcing. BPO that is contracted to a company's neighboring country is sometimes called nearshore outsourcing, and BPO that is contracted within the company's own country is sometimes called onshore outsourcing.The most common examples of BPO are call centers, human resources, accounting and payroll outsourcing.
Use of a BPO as opposed to an application service provider (ASP) usually also means that a certain amount of risk is transferred to the company that is running the process elements on behalf of the outsourcer. BPO includes the software, the process management, and the people to operate the service, while a typical ASP model includes only the provision of access to functionalities and features provided or 'served up' through the use of software, usually via web browser to the customer. BPO is a part of the outsourcing industry. It is dependent on information technology, hence it is also referred to as information technology enabled services or ITES.
Knowledge process outsourcing and legal process outsourcing are some of the subsets of business process outsourcing.s
In the early days, BPO usually consisted of outsourcing processes such as payroll. Then it grew to include employee benefits management. Now it encompasses a number of functions that are considered "non-core" to the primary business strategy.
Traditionally, BPO is undertaken by manufacturing firms. However, BPO is nowadays rapidly conquering the service oriented firms as well. A well-known example is provided by the Bank of America, who outsourced their entire HR function to Exult, one of the leading Human Resources BPO vendors.
Business process outsourcing is fast becoming the best option of most large-scale companies and businesses. Outsourcing is defined as the process of delegating a certain task or business operation to a third party provider instead of having it done inside the company or institution. If the job is passed on to another country, it becomes offshore outsourcing. Companies engage in offshore outsourcing to further cut the estimated production costs. Although this concept looks good from a vintage point, the problems of business process outsourcing are worth analyzing first
BPO is often divided into two categories:
• Back office outsourcing: which includes internal business functions such as billing or purchasing, and front office outsourcing, which includes customer-related services such as marketing or tech support.
• Front Office Outsourcing : which includes customer-related services such as marketing or tech support.
offshore outsourcing:BPO that is contracted outside a company's own country is sometimes called offshore outsourcing. BPO that is contracted to a company's neighboring country is sometimes called nearshore outsourcing, and BPO that is contracted within the company's own country is sometimes called onshore outsourcing.The most common examples of BPO are call centers, human resources, accounting and payroll outsourcing.
Use of a BPO as opposed to an application service provider (ASP) usually also means that a certain amount of risk is transferred to the company that is running the process elements on behalf of the outsourcer. BPO includes the software, the process management, and the people to operate the service, while a typical ASP model includes only the provision of access to functionalities and features provided or 'served up' through the use of software, usually via web browser to the customer. BPO is a part of the outsourcing industry. It is dependent on information technology, hence it is also referred to as information technology enabled services or ITES.
Knowledge process outsourcing and legal process outsourcing are some of the subsets of business process outsourcing.s
Evolution of BPO
Years Process
1960s Time sharing
1970s Data processing
1980s Entire IT operations
1990s Shared business services
2000s B2B partnerships via Internet
2000s Process outsourcing via Internet
2000s IT-enabled offshore services
1960s Time sharing
1970s Data processing
1980s Entire IT operations
1990s Shared business services
2000s B2B partnerships via Internet
2000s Process outsourcing via Internet
2000s IT-enabled offshore services
Insource If:
• Critical to the business
• No cost advantages from outsourcing
• Potential competitive advantages through
knowledge transfer
• Skill capabilities readily available in organization
• High cost of monitoring/administering outsourcing
partner
• Service levels better within organization
• No cost advantages from outsourcing
• Potential competitive advantages through
knowledge transfer
• Skill capabilities readily available in organization
• High cost of monitoring/administering outsourcing
partner
• Service levels better within organization
Outsource If:
• Function non-core and/or not a competitive niche
• Significant cost advantages from outsourcing
• Limited/no opportunity for learning transfer
• Skill competencies not available in organization
• Cost of monitoring/administering outsourcing
partner is low
• Comparable or better service levels from
Outsourcing
• Significant cost advantages from outsourcing
• Limited/no opportunity for learning transfer
• Skill competencies not available in organization
• Cost of monitoring/administering outsourcing
partner is low
• Comparable or better service levels from
Outsourcing
Benefits of Outsourcing:
Do you want to maximize your revenue and minimize your expenses? Do you want to get access to specialized skills and services? Do you want to concentrate more on your core business? Do you want to save on money, time and infrastructure?
If your answer is yes to any or all of the above questions, you might be interested in outsourcing. Outsourcing has several benefits. Outsource and take advantage of the benefits of offshore outsourcing. Read the following benefits of outsourcing to find out more about how outsourcing can give your business a competitive advantage!
1. Take advantage of the cost-advantages!
Outsourcing to countries such as India can give you access to cost-effective services. The same services with the same level of quality are offered in India for a much lower cost! This cost-advantage has increased the number of services that are being offered to India. Services such as call center services, teleradiology, medical billing, etc can help you save up to 60% of your total costs when outsourced! Getting access to high-quality services at a cost-effective price is the biggest benefit that you can get while outsourcing. Outsource and reap the benefits of outsourcing.
2. See an increase in your business
Another benefit of outsourcing is seeing a big increase in your profits, productivity, level of quality, business value, business performance and much more. Outsourcing can help
you see an increase in almost every aspect of your business. Outsource and see your organization experience an increase in every aspect with these benefits of outsourcing.
3. Save Big!
One of the benefits of outsourcing is that you can save on every aspect of your business and increase your profits. When you outsource, you can save on time, effort, infrastructure and manpower. Since you don't have to invest in infrastructure, you can also save on making unnecessary fixed investments. Outsourcing removes the burden of changing or maintaining infrastructure. You can also save on capital expenditure. Outsourcing can also help you save on training costs, because you do not have to invest in manpower. These savings will help bring about an increase in your revenue. Your organization can also save on investing in expensive software and technologies.
4. Get access to specialized services
By outsourcing you can get expert and skilled services. This benefit of outsourcing has been the key reason why several outsourcers opt for outsourcing. The function that you outsource may not be your core competency but you can find an outsourcing partner who is specialized in that particular business process. Your outsourcing partner will be able to provide more proficient services. This is yet another benefit of outsourcing, because if you perform all your business processes in-house, you will not be able to provide specialized and skilled services. Outsourcing can give you this advantage.
Outsource2india is an organization that offers a wide range of specialized business process outsourcing solutions to global clients. Outsourcing business processes to us has enabled clients to cross-leverage our skills and expertise across industry verticals and technologies to achieve greater efficiency and quality levels in the outsourced process.
At Outsource2india, we have dedicated teams that offer outsourced services across a range of services which include Call center, Data Managementand Engineering Services, Healthcare Services, Financial Services, Software Services, Research and Analysis Services, Digital Image Editing Services, Creative Services and Web-analytics Services.
Outsource specific processes to our expert teams and increase your ROI. Contact O2I here.
5. Concentrate more on your core business
One of the benefits of outsourcing is that your organization will be free to concentrate on your core business. By outsourcing all your non-core functions, your employees can be put to better use and you will be able to see a huge growth in your core business.
6. Make faster deliveries to customers
Another benefit of outsourcing is that you can make quicker deliveries to customers. Your outsourcing partner will be able to provide faster deliverables and you in turn will be able to make quick deliveries to your customer. Faster deliveries can also help you save on time.
7. Improved customer satisfaction
With timely deliveries and high-quality services you can impress your customers. Outsourcing can help you benefit from increased customer satisfaction and your customers will remain loyal to your organization.
8. Benefit from time zone advantages
Outsourcing to countries such as India has a time zone advantage. Your night will be India's day. With this advantage, your outsourcing partner can complete critical work and send it to you the next day. Thus, your work is continued by your outsourcing partner even after your employees go home. This enables the work to be completed much faster and gives your business a competitive advantage. This is one of the benefits of offshore outsourcing.
9. Increased efficiency
Another benefit of outsourcing is increased efficiency. Your non-core business functions will be performed efficiently by your outsourcing partner, while your core functions can be efficiently carried out in-house. Thereby you can achieve overall efficiency and see an increase in your profits.
10. Give your business a competitive edge!
Outsourcing can help your organization gain a competitive edge in the market. You can also get access to specialized services for different business processes and thereby provide your customers with best-of breed services. Such strategic outsourcing can give your business a competitive edge among your peers. The benefits of outsourcing can give your organization a cutting-edge in the worldwide market. Outsource and take advantage of the benefits of outsourcing.
11. Outsourcing countries also benefit from outsourcing
Countries such as U.S, U.K, Norway and Australia amongst others can benefit by outsourcing. The economy of these countries has increased tremendously after outsourcing. In the U.S, after the outsourcing boom, the economy has increased, jobs have increased and the wages of American workers have increased.
If your answer is yes to any or all of the above questions, you might be interested in outsourcing. Outsourcing has several benefits. Outsource and take advantage of the benefits of offshore outsourcing. Read the following benefits of outsourcing to find out more about how outsourcing can give your business a competitive advantage!
1. Take advantage of the cost-advantages!
Outsourcing to countries such as India can give you access to cost-effective services. The same services with the same level of quality are offered in India for a much lower cost! This cost-advantage has increased the number of services that are being offered to India. Services such as call center services, teleradiology, medical billing, etc can help you save up to 60% of your total costs when outsourced! Getting access to high-quality services at a cost-effective price is the biggest benefit that you can get while outsourcing. Outsource and reap the benefits of outsourcing.
2. See an increase in your business
Another benefit of outsourcing is seeing a big increase in your profits, productivity, level of quality, business value, business performance and much more. Outsourcing can help
you see an increase in almost every aspect of your business. Outsource and see your organization experience an increase in every aspect with these benefits of outsourcing.
3. Save Big!
One of the benefits of outsourcing is that you can save on every aspect of your business and increase your profits. When you outsource, you can save on time, effort, infrastructure and manpower. Since you don't have to invest in infrastructure, you can also save on making unnecessary fixed investments. Outsourcing removes the burden of changing or maintaining infrastructure. You can also save on capital expenditure. Outsourcing can also help you save on training costs, because you do not have to invest in manpower. These savings will help bring about an increase in your revenue. Your organization can also save on investing in expensive software and technologies.
4. Get access to specialized services
By outsourcing you can get expert and skilled services. This benefit of outsourcing has been the key reason why several outsourcers opt for outsourcing. The function that you outsource may not be your core competency but you can find an outsourcing partner who is specialized in that particular business process. Your outsourcing partner will be able to provide more proficient services. This is yet another benefit of outsourcing, because if you perform all your business processes in-house, you will not be able to provide specialized and skilled services. Outsourcing can give you this advantage.
Outsource2india is an organization that offers a wide range of specialized business process outsourcing solutions to global clients. Outsourcing business processes to us has enabled clients to cross-leverage our skills and expertise across industry verticals and technologies to achieve greater efficiency and quality levels in the outsourced process.
At Outsource2india, we have dedicated teams that offer outsourced services across a range of services which include Call center, Data Managementand Engineering Services, Healthcare Services, Financial Services, Software Services, Research and Analysis Services, Digital Image Editing Services, Creative Services and Web-analytics Services.
Outsource specific processes to our expert teams and increase your ROI. Contact O2I here.
5. Concentrate more on your core business
One of the benefits of outsourcing is that your organization will be free to concentrate on your core business. By outsourcing all your non-core functions, your employees can be put to better use and you will be able to see a huge growth in your core business.
6. Make faster deliveries to customers
Another benefit of outsourcing is that you can make quicker deliveries to customers. Your outsourcing partner will be able to provide faster deliverables and you in turn will be able to make quick deliveries to your customer. Faster deliveries can also help you save on time.
7. Improved customer satisfaction
With timely deliveries and high-quality services you can impress your customers. Outsourcing can help you benefit from increased customer satisfaction and your customers will remain loyal to your organization.
8. Benefit from time zone advantages
Outsourcing to countries such as India has a time zone advantage. Your night will be India's day. With this advantage, your outsourcing partner can complete critical work and send it to you the next day. Thus, your work is continued by your outsourcing partner even after your employees go home. This enables the work to be completed much faster and gives your business a competitive advantage. This is one of the benefits of offshore outsourcing.
9. Increased efficiency
Another benefit of outsourcing is increased efficiency. Your non-core business functions will be performed efficiently by your outsourcing partner, while your core functions can be efficiently carried out in-house. Thereby you can achieve overall efficiency and see an increase in your profits.
10. Give your business a competitive edge!
Outsourcing can help your organization gain a competitive edge in the market. You can also get access to specialized services for different business processes and thereby provide your customers with best-of breed services. Such strategic outsourcing can give your business a competitive edge among your peers. The benefits of outsourcing can give your organization a cutting-edge in the worldwide market. Outsource and take advantage of the benefits of outsourcing.
11. Outsourcing countries also benefit from outsourcing
Countries such as U.S, U.K, Norway and Australia amongst others can benefit by outsourcing. The economy of these countries has increased tremendously after outsourcing. In the U.S, after the outsourcing boom, the economy has increased, jobs have increased and the wages of American workers have increased.
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