Business Process Outsourcing (BPO), is
a subset of outsourcing that involves the contracting of the operations and responsibilities of specific business process to a third party service provider. Since the mid-1990s, BPO firms have been one of the largest job creators in India, redefining pay scales and the work environment for many young Indians. Indian companies offered a bouquet of outsourced services like customer care, medical transcription, medical billing, payroll management, tax processing. Often the business process are IT-based, and are referred to as ITES-BPO.
Enhance the flexibility of an organization in 3 ways: 1. BPO vendors are offered on a fee-for-service basis This can help a company becoming more flexible by transforming fixed into variable costs. A variable cost structure helps a company responding to changes in required capacity and does not require a company to invest in assets, thereby making the company more flexible
2. Focus on its core competencies
Key employees are herewith released from performing non-core or administrative processes and can invest more time and energy in building the firm’s core businesses
3. Increasing speed of business processes
Supply chain management with the effective use of supply chain partners and business process outsourcing increases the speed of several business processes, such as the throughput in the case of a manufacturing company
Although the above-mentioned arguments favor the view that BPO increases the flexibility of organizations, management needs to be careful with the implementation of it as there are issues, which work against these advantages. Among problems, which arise in practice are: A failure to meet service levels, unclear contractual issues, changing requirements and unforeseen charges, and a dependence on the BPO which reduces flexibility
BPO in India
BPO Growth in...