BPO

1. BPO MCB1163 HW/SW/CC SKIT 7 SEM I, 2008/2009

2. What is BPO? • 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.

3. What is BPO? • 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.

4. What is BPO? • 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.

5. What is BPO? • BPO has evolved over the years, beginning with time-sharing data processing in the 1960s. Over these years, like outsourcing, BPO has moved from being transactional (task oriented) to being strategic (process oriented).

6. BPO Trends • The BPO industry is a developing sector and is being studied by analysts and researchers all over the world. Analysts tracking BPO have observed the following trends in the industry:

7. BPO Trends • The BPO market worldwide is expanding with new services getting added to the list of business processes that are outsourced and new locations coming up as potential offshore destinations, India being the most preferred destination for offshore BPO.

8. BPO Trends • Cost savings is one of the most important drivers now. Information security, execution capability and financial stability are important considerations while selecting a vendor.

9. BPO Trends • According to IDC, customer care and logistics are mature segments, while procurement and training are emerging markets and are expected to have a growth of more than 10 percent in the next five years.

10. BPO Trends • Gartner has also observed the latest trend of offshore insourcing, in which firms establish their own offshore captive centers. These captive centers are generally shared service centers and allow the firms to retain control over the processes.

11. What Constitutes BPO • BPO deals mainly with non-core processes of an organization. Some of these processes have been briefly explained below. • Administrative support: Outsourcing of administrative support functions includes data entry, document conversion, forms processing, document scanning, indexing, secretarial tasks support, etc.

12. What Constitutes BPO • Customer relationship management: Customer service outsourcing includes outsourcing of functions such as customer support, order taking, customer service, product support, technical help desk, collections and market research. Refer to the report on Customer Service Outsourcing for more details.

13. What Constitutes BPO • Document processes: Document process outsourcing includes outsourcing of customer facing, technical, marketing and communications, financial accounting, and regulatory compliance documents. • Finance and accounting: Finance and accounting outsourcing includes services such as internal auditing, time and expense management, travel expenses, credit and debt analysis, collections, invoicing, accounts payable, accounts receivable and billing-dispute resolution.

14. What Constitutes BPO • Human resources and training: Human resources (HR) is one of the most critical assets of a company and companies need to carry out various tasks such as recruitment, training, attrition/retention, database management, contract-worker management, etc., for their employees. Carrying out these tasks through an internal HR department is costly and diverts the attention of the management from its core business issues. Hence, companies are now resorting to HR outsourcing big time. • Intellectual property research and documentation: Outsourcing in intellectual property research and documentation includes filing and drafting of patent applications, prior art research, licensing support, and patent portfolio analysis.

15. What Constitutes BPO • Legal services: Legal process outsourcing (LPO) involves consulting, research, transcription, documents management, billing, translation and other administrative and secretarial support services required for various legal functions such as commercial litigation, arbitration and mediation, appeals, government contracts, legal risk evaluation, etc. • Medical transcription: Medical transcription is writing down medical records dictated by physicians and other healthcare professionals. These records include patient history and physical reports, clinic notes, therapeutic procedures, clinical course, diagnosis, prognosis, discharge summaries, etc.

16. What Constitutes BPO • Payroll maintenance and other transaction processing: This segment includes payroll, payment, check, credit card and stock trade processing. Forester research predicts transaction processing to be a large segment within the BPO industry soon, with a market size of USD 58 billion in 2008. Some vertical processes such as mortgage, loans and insurance claims processing are also being outsourced. • Product development: Companies need to constantly innovate to remain competitive in the market. With the increasing specialization of expertise required to carry out product development, companies choose to outsource their R&D functions to vendors who have expertise in a given field. Over the past few years, numerous MNCs have initiated offshoring R&D to other countries including India which is emerging as a hub for R&D outsourcing.

17. What Constitutes BPO • Publishing: Publishing outsourcing involves outsourcing of publishing functions such as book design, book digitization, e-publishing, drawings and graphics, indexing, journal administration, etc. • Research and analysis: Companies require data and its analysis for making informed strategic decisions. These companies have started outsourcing their research and analysis requirements to vendors who specialize in typical research and analysis work such data analytics, financial analytics, market research, secondary research, primary research, industry overview, competitive intelligence, etc. • Sales and marketing (including telemarketing): Sale and marketing outsourcing involves delegating parts of sales and marketing functions such as cold calling, email pitches, telephone surveys, lead generation, lead qualifying, appointment setting, sales team management, etc.

18. What Constitutes BPO • Security: Companies have to search for new technologies and employ qualified security professionals to keep their data secure from theft. Maintaining these resources and implementing a fool-proof security policy is a difficult task which can be better handled by experienced third party security agencies. Security outsourcing involves management of investigative services, physical security, electronic security systems, computer and network security, etc. • Supply chain management: Outsourcing in supply chain management involves logistics, procurement, warehouse management, contract management, supply chain relationship management, etc.