What is BPO ( Business Process Outsourcing) ?
It is a subset of outsourcing that involves the contracting of the operations and responsibilities of specific business functions (or processes) to a third-party service provider.PROS:
Focusing on Core Business
The second biggest reason companies choose to outsource is to free up time to focus on core business processes. Without having to run an accounting department or an IT operation, companies are able to direct their scope to work on what really matters inside their business, increasing work flow and allowing managers to finish projects faster.Reduced Operational and Recruitment costs
Outsourcing eludes the need to hire individuals in-house; hence recruitment and operational costs can beminimized to a great extent. This is one of the prime advantages of offshore outsourcing
Swiftness and Expertise
Most of the times tasks are outsourced to vendors who specialize in their field. The outsourced vendors also have specific equipment and technical expertise, most of the times better than the ones at the outsourcing organization. Effectively the tasks can be completed faster and with better quality output.Lower Regulatory Costs
Not only can companies pay offshore workers less, but significantly lowering regulatory costs also drive down the outsourcing price tag. Programs like Social Security, Medicare and unemployment insurance don’t exist in many developing countries, which drive down outsourcing costs further. Even if an outsourced worker makes the same as his/her American or European counterpart, lower regulatory costs mean that it’s usually much cheaper for the business to go with the overseas employee.Lower Wages
As the old saying goes, it’s all about the money. The fact of the matter is that most companies wouldn’t be sending jobs overseas if they weren’t saving money. According to a 2010 study, India’s per capita income is $1,371, good for 133rd in the world. By comparison, the United States placed tenth, with a per capita income of $46,860. Lower wages are a huge factor when outsourcing, and the top reason companies choose to send parts of their operation overseas.Improved Service
Believe it or not, outsourcing can actually help improve service. Why waste time and valuable resources training an in-house customer service team when there are professionals to be hired that can usually do the same task for less money? IT performance, HR functions and financial services are some of the most commonly outsourced jobs, and companies all over the world have been working in those specific fields for years. Having an offshore company handle non-core business activities usually leads to better service.CONS:
Risk of exposing confidential data
When an organization outsources HR, Payroll and Recruitment services, it involves a risk if exposing confidential company information to a third-partyLack of customer focus
An outsourced vendor may be catering to the expertise-needs of multiple organizations at a time. In such situations vendors may lack complete focus on your organization’s tasksLoss Of Managerial Control
Whether you sign a contract to have another company perform the
function of an entire department or single task, you are turning the
management and control of that function over to another company. True,
you will have a contract, but the managerial control will belong to
another company. Your outsourcing company will not be driven by the
same standards and mission that drives your company. They will be
driven to make a profit from the services that they are providing to you
and other businesses like yours.
by:masterofvectors
