Business Process Outsourcing (BPO) is fast emerging as a
flexible and powerful approach that business leaders adopt to achieve their
strategic business aims. BPO refers to the delegation of information
technology based business processes to an external provider that owns and
manages the selected process based on pre-defined performance criteria. It
allows the organization to focus on its core competencies enabling it to
manage growth and scale, reduce costs and enable migration of best practices
and processes from the outsourced partner.
BPO services help mitigate risks and secure benefits through a structured
approach. These services include:
- Finance & Accounting
- Supply Chain Management
- Customer Relationship Management
BPO is fast gaining popularity due to the following factors:
- Factor Cost Advantage
- Superior Competency
- Utilization Improvement
- Economy of Scale
- Business Intelligence and Knowledge services
Through the right mix of process improvement, labor arbitrage and technology
enhancements, BPO is aimed at reducing cost, increasing service levels and
thus improving the enterprise value of the business processes. Blending
qualified workforce with and faster adoption of well-defined business
processes leads to higher productivity gains without compromising on
quality.
The different sectors that adopted BPO early include: Insurance, Banking,
Pharmaceuticals, Telecom, Automotive and Airlines. Of these sectors,
insurance and banking generate large amount of the savings because of large
proportion of processes they can outsource like claims processing, loans
processing and client servicing through call centers. The offshore
operations of the clients have increased owing to the improvement in cost,
quality and productivity.
When BPO first emerged several years ago, the term meant contracting of one
company by another to execute a business process end-to-end. By definition,
it goes a significant step beyond traditional outsourcing contracts, in
which a company delegates only components of a business process to an
outside vendor. BPO's momentum continues to grow as the factors that force
companies to focus on core competencies intensify. Using BPO to respond to
these demands is causing a significant shift in the way business is being
done, and it is requiring executives to be creative. BPO offers enormous
opportunities for change and is emerging as one of the most important ways
to build shareholder value.
