Business Process Outsourcing



As the internet and voice-over-internet-protocol became more widely used and the cost of bandwidth and high volume telecommunications costs came down in the mid-1990s, it became possible to have telephone calls answered from across the globe at costs that were easily offset by the lower labor costs in the countries from where these calls were handled. General Electric (GE) first spotted this opportunity and set up a Call Center in Gurgaon, near Delhi in India sparking off the global trend for Business Process Outsourcing or BPO.

BPO is today a well established practice in many large enterprises in the United States of America and United Kingdom and expanding to more organizations as global competition forces businesses to look at ways to cut costs and reduce fixed overheads.

Countries that are active in the BPO area include the United States of America and United Kingdom as buyers of BPO services and Canada, Australia, India, Philippines, South Africa and Mexico as providers of BPO services.

BPO delivers a number of benefits if applied successfully.

1. Businesses benefit from the large differential in costs of labor between countries. Germany, United States of America and United Kingdom have the highest costs of labor worldwide while countries like Canada and Australia have lower costs. In countries like India, Russia, China, Philippines and South Africa, the cost of labor is substantially lower and therefore it becomes very attractive to have work done in these countries.

2. The time zones in some of these countries are several hours away, in some cases as many as 12 hours. This means that work can be done and services provided during the nights in buyer countries without running night shifts while the work is actually done during the day in the provider countries. Businesses can virtually run the 24 hour cycle improving productivity and speed of development and operations.

3. Businesses can better exploit skills and experience through global resource management. Thus a local workforce that can do more critical and higher value business work can be deployed to do that while the work that businesses were forced to assign to them but which was of lower value can now be done in another country where there is suitable talent available.

4. In many cases there has actually been a rise in quality and delivery through the BPO because some of the provider countries have been able to deploy substantially better quality personnel while still providing the cost benefit.

BPO has had a backlash in the buyer countries especially the United States of America and United Kingdom where citizens have been protesting the loss of jobs in their own countries while other countries have been gaining. Some state and local governments have actually instituted bans on work from government institutions in their jurisdiction being outsourced to other counries and barred companies to whom they have assigned work, having this work done from outside their national borders. This dissent has however reduced substantially in recent weeks after reaching a crescendo during the recent US presidential elections.

BPO began with the transfer of call centers for customer service to countries like India but has now extended to a number of other business processes including

	Payroll administration
	Insurance claims management
	Human resource management
	Medical billing
	Equity research
	Medical transcription
	Content development
	Patent research and application processing

Due to internet based business applications it is now possible to have business work processes done across locations and time zones without compromising on quality and speed of operation.

The number of areas that BPO can be applied to are several and in the next few years there will be a larger quantum of work that will be done through the BPO route.

A critical requirement of BPO is the availability of skilled workforce speaking the English language and this has limited the BPO movement to buyer countries like the United States and United Kingdom and provider countries like India, Canada, South Africa and Philippines. More countries like China, Mexico and Russia are ramping up their English speaking workforce to become a part of the BPO movement while countries like Germany, France and Spain are trying to find or train workforces in countries that speak and work in their languages so that they can have BPO work done from them.


Global Leaders in Business Process Outsourcing include:

	General Electric
	IBM
	Exult
	Wipro
	OfficeTiger