Introduction

Today’s business world is marked by change, complexity and the need to rapidly adapt to new market demands without losing momentum on strategic objectives.
In order to be successful, business executives and managers need to be able to deal with numerous challenges in this dynamic business environment, balancing financial pressures with the need to mitigate risk and maintain business flexibility—while driving higher return on technology investments.
Business Process Outsourcing (BPO) is outsourcing of business functions generally performed by white collar and clerical employees to achieve various benefits such as cost savings, better quality and ability to focus on core competence. BPO involves outsourcing processes that are not core to a company, however, are essential for smooth operation of the company. The customer transfers the complete responsibility of these functions to the vendor who guarantees certain service quality standards. Such processes include customer service, payroll processing, inventory management, etc. The global market size for BPO is estimated to be around USD 382.5 billion in 2004 according to market intelligence firm IDC. The research firm expects robust growth in the BPO industry with more and more companies reaping the benefits of BPO all over the world. The BPO market size is expected to reach USD 641.2 billion by 2009 with a Cumulative Annual Growth Rate (CAGR) of 10.9 percent from 2005 to 2009.BPO has evolved over the years, beginning with time-sharing data processing in the 1960s; according to technology research and consulting firm ebs. Over these years, like outsourcing, BPO has moved from being transactional (task oriented) to being strategic (process oriented). Table 1 provides the key milestones in the evolution of BPO
History of Business Process Outsourcing
The history of business process outsourcing management can be traced as early as the 1830's. It first happened when America commissioned the workers based in Scotland to build wagon covers and ship sails. By 1970's, a lot of computer companies in the US began to export their payroll preparation systems to the different financial offices offering such services. And this continued for a whole decade. And by 1980, almost all accounting works, and even word processing tasks, were outsourced.
The Need for Business Process Outsourcing
Before, business process outsourcing is performed only within America. The whole process works similarly to the transferring of a job to a business center located in an entirely different state so as to fulfill a company's database management or data encoding needs, for example. But because business process outsourcing has proven to be a rather feasible option, companies started to see the advantages and the necessity for such a service.

Business process outsourcing had effectively cut labor costs. When a certain job is transferred to a different country where labor is relatively cheap, then a much bigger production team can be commissioned to do that particular job. As a result, there would be more tasks completed at half the cost compared when it is done within the company walls.

Aside from that, there will also be lower overhead costs. Because the job is passed on to somebody else, the use of company resources is conserved. There won't be a need for an additional space for that particular job inside the company, for one thing. There would also be lower maintenance costs as well. Even the smaller things like electricity bills and water bills for the company and insurance payments for the workers are cut dramatically. The lesser workers a company keeps, the lesser overhead costs it has.