Information Technology: Bpo

Topics: Business process outsourcing, Business process, Outsourcing Pages: 6 (1858 words) Published: May 2, 2013
1 “Outsourcing Comes of Age” (April 9th, 2004) Economic Times

2 “What is BPO” (Accessed February 20th, 2013)

3 “Back Office to the World” (May, 2001) The Economist

4 “IBM Acquires Indian BPO Company Daksh” (Accessed February 20th, 2013) John Ribiero

Executive Summary

The Business Process Outsourcing (BPO) industry is large and dynamic, and has seen considerable growth in the last ten to fifteen years, particularly in India. This case will explore the key drivers and players present in this burgeoning sector, as well as analyze the potential inconsistencies and perceived “paradoxes”. Specifically, this report will focus on Daksh, an Indian based BPO firm, and trace its rise from inception to eventual buyout by IBM. Finally, the reasoning behind the buyout will be examined, with an assessment of the reasoning behind the deal for each party.

By 2003, it is estimated that the global business process outsourcing (BPO) industry was valued at roughly $773 billion. [1] BPO is centered on the notion of blending the concept of business process management with that of outsourcing. Essentially, BPO firms utilize information technology (IT) platforms in order to provide serve their client’s various business needs from a remote location. The key players in the industry include countries such as China, Mexico, Singapore, Malaysia, The Philippines, and most predominantly, India. India is estimated to possess roughly 63% of the offshore BPO activity, a substantial difference over the next closest competitor. [2}

The rise of BPO is tied to companies’ desire to reduce costs, and improve their bottom line. The rise of technology, specifically rapidly increased Internet capabilities, has made this type of outsourcing all the more necessary and attractive. In a technologically driven society, people demand increasingly expedient turnaround times, whether in offering business solutions or in the servicing of customers, and BPO makes this a possibility. It is contingent upon the cheap availability of resources, such as land and labor, present in developing nations like India and China. However, it is also important that these countries possess the technological infrastructure and educated employee base necessary in order to support such comprehensive service offerings. BPO is a rapidly growing industry, and the onus falls on these developing nations to keep pace.

India was able to emerge as the leading destination for companies seeking to expand a part of their operations off shore. As with many developing countries, companies outsourcing operations to India enjoy the benefits of greatly reduced labor costs. However, India in particular enjoys a distinct advantage over most of the other potential BPO destinations due to its history with the English language. A substantial portion of Indian college graduates are fluent in English, a benefit that many companies, particularly US based, are eager to exploit. Similarly, India is considerably far to the east of a majority of the industrialized world, allowing them to take advantage of time differences in the developed nations and offer their services around the clock.

As with any fast growing industry, BPO contains certain seeming inconsistencies when examined more closely. For example, firms outsource parts of their business in order to cut costs, and this is often the case. However, many have discovered that in doing so, they were actually opened up to knew and unexpected costs, usually related to maintenance and infrastructure problems. Similarly, the benefits of providing service 24 hours a day also come with draw backs, such as the scheduling conflicts and various social issues, not the least of which is the physical toll odd working hours may have on the employees. Companies engaging in BPO are...
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