BPOBPO

AgendaAgenda

• What is BPO?What is BPO?

• Categories.Categories.

• Key Terms.Key Terms.

• Rule to Follow.Rule to Follow.

• BPO to India.BPO to India.

• Pros and Cons.Pros and Cons.

What is BPO?What is BPO?• Business process outsourcing (BPO) is Business process outsourcing (BPO) is

the contracting of a specific business the contracting of a specific business task, such as human resources and task, such as human resources and customer service, to a third-party customer service, to a third-party service provider.service provider.

• This allows companies to focus on This allows companies to focus on their core business processes.their core business processes.

• BPO is implemented as a BPO is implemented as a cost-savingcost-saving measure for tasks that a company measure for tasks that a company requires.requires.

BPO CategoriesBPO Categories

• It is often divided into two categories: It is often divided into two categories:

- - Back Office OutsourcingBack Office Outsourcing which which includes internal business functions includes internal business functions such as billing or purchasing.such as billing or purchasing.

- - Front Office OutsourcingFront Office Outsourcing which which includes customer-related services such includes customer-related services such

as marketing or tech support.as marketing or tech support.

Key TermsKey Terms

• Key Terms:Key Terms:

- - Offshore OutsourcingOffshore Outsourcing is BPO that is is BPO that is contracted outside a company's own contracted outside a company's own country.country.

- - Nearshore OutsourcingNearshore Outsourcing is BPO that is BPO that is is contracted to a company's contracted to a company's neighboring neighboring country.country.

- - Onshore OutsourcingOnshore Outsourcing is BPO that is is BPO that is contracted with the company's own contracted with the company's own

country. country.

Rules to Follow: What to Rules to Follow: What to OutsourceOutsource

• Processes that do not add value to a Processes that do not add value to a product or service.product or service.

• Highly repeated tasks with little Highly repeated tasks with little variation.variation.

• Labor intensive tasks that do not Labor intensive tasks that do not require a companies intellectual require a companies intellectual property nor core competencies.property nor core competencies.

• Processes that will tie up large Processes that will tie up large amounts of capital in assets.amounts of capital in assets.

Rules to Follow: What Not to Rules to Follow: What Not to OutsourceOutsource

• Processes that incorporate your core Processes that incorporate your core competencies.competencies.

• Processes that require access to Processes that require access to intellectual property of your intellectual property of your company.company.

• Non-labor intensive tasks.Non-labor intensive tasks.

• Processes that are associated with Processes that are associated with the image of your company.the image of your company.

Rules to Follow: BPO Rules to Follow: BPO GuidelinesGuidelines

• There are many BPO providers, so There are many BPO providers, so research to find the one that best research to find the one that best suits your needs.suits your needs.

• Using one provider for multiple tasks Using one provider for multiple tasks will help streamline your BPO.will help streamline your BPO.

• Have some measure to check and Have some measure to check and control the output of your BPO.control the output of your BPO.

• Communicate with your BPO.Communicate with your BPO.

BPO to IndiaBPO to India

BPO to IndiaBPO to India• Indian revenues from BPO are Indian revenues from BPO are

estimated to have grown 107% estimated to have grown 107% to $ 583 million.to $ 583 million.

• Leading Competitors:Leading Competitors:

- Philippines, Mexico, - Philippines, Mexico, Canada, China and Canada, China and Ireland.Ireland.

• 67-72% of costs to call centers 67-72% of costs to call centers operating in the US/UK is operating in the US/UK is directly linked to man power directly linked to man power costs. India only spends 33-costs. India only spends 33-40% of costs on man power. 40% of costs on man power. This includes training, benefits This includes training, benefits and other incentives for labor. and other incentives for labor.

Statistics of the FutureStatistics of the Future

India's BPO Market in 2008

Service Line First Estimate (1999) Second Estimate (2001)

HR 5.4 3.5-4.0

Customer Care 4.1 8.0-8.5

Payment Services 2.9 3.0-3.5

Content Development 2.6 2.5-3.0

Administration 1.3 1.5-2.0

Finance 0.7 2.5-3.0

Figures in $ billion

The main revenue areas for Indian BPO companies.

Indian revenues from BPO are estimated to have grown 107 Indian revenues from BPO are estimated to have grown 107 per cent to $ 583 million.per cent to $ 583 million.

Statistics of the FutureStatistics of the Future

US$ Cost per FTE (Full Time Employee) United States India India as % of US costs

Personnel 42,927 6,179 14%

G&A Expense 8,571 1,000 12%

Telecom 1,500 2,328 155%

Property Rentals 2,600 847 33%

Depreciation 3,000 1,500 50%

TOTAL EXPENSES 58,598 11,854 20%

Comparisons of India vs US BPO Costs

2012…2012…

2012…2012…

Capabilities: Why go to Capabilities: Why go to India?India?

• Language Language – Major attraction for Major attraction for

MultinationalsMultinationals– Advantage over competitorsAdvantage over competitors

• Educated EmployeesEducated Employees– Large number of qualified Large number of qualified

workersworkers– Proven to be the best in the IT Proven to be the best in the IT

and computer software fieldsand computer software fields•Strong technical skills Strong technical skills •Eagerness to engage clientsEagerness to engage clients

– Produce around 100,000 Produce around 100,000 engineers annuallyengineers annually

Capabilities: Why go to Capabilities: Why go to India?India?

• InfrastructureInfrastructure– Improvements have led to Improvements have led to

increasing successincreasing success•Telecom facilitiesTelecom facilities•Power sectorPower sector• India as a wholeIndia as a whole

• GovernmentGovernment– Realize potential for economic Realize potential for economic

developmentdevelopment– Favorable policies have turned Favorable policies have turned

India into a BPO/IT hub.India into a BPO/IT hub.•Examples: Investment Examples: Investment

promotion, telecom policy, IT promotion, telecom policy, IT ActAct

Pros of BPOPros of BPO

• English Language ProficiencyEnglish Language Proficiency

• Skilled WorkforceSkilled Workforce

• Lower WagesLower Wages

• Flexibility in Working HoursFlexibility in Working Hours

• Suitable Human ResourcesSuitable Human Resources

• Large Number of GraduatesLarge Number of Graduates

Cons of BPOCons of BPO

• No TCO based costs No TCO based costs (While total cost of ownership (TCO), a summary (While total cost of ownership (TCO), a summary

of all tangible costs associated with a BPO contract, is still a near universal tool used by BPO buyers when of all tangible costs associated with a BPO contract, is still a near universal tool used by BPO buyers when assessing a potential contract, BPO buyers are beginning to look beyond TCO into intangible, non-linear assessing a potential contract, BPO buyers are beginning to look beyond TCO into intangible, non-linear factors associated with outsourcing relationships.)factors associated with outsourcing relationships.)

• Poor InfrastructurePoor Infrastructure

• Cultural DifferencesCultural Differences

• Internal competition for resourcesInternal competition for resources

• Rising labour costsRising labour costs

• Political and religious instabilityPolitical and religious instability

ConclusionConclusion

• As a manager!As a manager!– Allows company to focus on core Allows company to focus on core

competencies.competencies.– What the future lies.What the future lies.– Attractiveness of India.Attractiveness of India.

SourcesSources• BPO India: Business Process Outsourcing. BPO India: Business Process Outsourcing.

http://www.bpoindia.org/http://www.bpoindia.org/

• Forbes Magazine: Business Process Outsourcing. Forbes Magazine: Business Process Outsourcing. http://www.forbes.com/bow/b2b/industry.jhtml?id=38http://www.forbes.com/bow/b2b/industry.jhtml?id=38

• Why India?Why India?

http://www.indobase.com/bpo/why-india/index.htmlhttp://www.indobase.com/bpo/why-india/index.html

• InformationWeek: Indian Outsourcers Grow Fast, Gain Prominence. InformationWeek: Indian Outsourcers Grow Fast, Gain Prominence. 

http://www.informationweek.com/story/showArticle.jhtml?http://www.informationweek.com/story/showArticle.jhtml?articleID=53701018articleID=53701018

• CIO Definitions: CIO Definitions: http://searchcio.techtarget.com/sDefinition/0,,sid19_gci928308,00.hthttp://searchcio.techtarget.com/sDefinition/0,,sid19_gci928308,00.htmlml

• BPO service India: Comparing India with other BPO destinations.  BPO service India: Comparing India with other BPO destinations. 

http://www.xicom.biz/bpo_swot_analysis.htmlhttp://www.xicom.biz/bpo_swot_analysis.html