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BPO
Academic year: 2010-11 BHARATI COLLEGE Teacher Incharge: Mrs. Hari Krishani Mentor: Mrs. Krishna Singhal Submitted by: Payal Uppal Roll No.: 595
Declaration
I, Payal Uppal, Roll No-595, a student of Bharati College, pursuing B.Com (H) Second Year, hereby declare that I have completed my project titled Business Process Outsourcing(BPO) in the academic year 2010-11. The project is based on my understanding of the subject and has not been copied from any published source or website.
Acknowledgements
I am grateful to the University of Delhi for providing its students a valuable opportunity to widen their knowledge and research on a topic of their choice. I extend my sincere thanks to my Teacher incharge, Mrs. Hari Krishani and Mentor- Mrs. Krishna Singhal for the encouragement, guidance and time invested with me for the development of my project. I feel highly obliged for the efforts, which she took in answering my queries. Also, I would like to thank my parents and friends who provided me unstinted support and invaluable suggestions for the improvement of the project.
Table Of Contents
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Concept Of Business Process Outsourcing The Outsourcing Guide Benefits Of Business Process Outsourcing Disadvantages of BPO Why Outsource Outsourcing of different types Services Key Factors in successfully outsourcing Business Process Business Process Outsourcing in India Government Support SWOT on Indias BPO Industry References
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The idea of business process outsourcing originated from the theory of core competence suggested by C.K. Prahlad. According to this theory a business enterprise should identify the areas of its core competence and focus only on them. In order to utilize its strengths and resources fully for its core competencies, a corporation has to get non core functions performed by outside agencies.
Reliance Industries Ltd. Wants to outsource advertising service for its Vimal brand of clothing and it appoints ABC Advertising to design, prepare and release advertisements on its behalf, Reliance is the client company which outsources advertising service and ABC Advertising is the vendor or external provider, or outsourcer.
THE OUTSOURCING GUIDE (OR WHAT TO CONSIDER BEFORE YOU TAKE THE LEAP)
You have to be alert to at least three things: selection of the right activities to outsource, identification of the right supplier of services and the right governance approach (service legal agreements) for the relationship. Thats easier than done. Heres quick checklist. 1. What is a good starting point for an outsourcing programme? The sensible approach is to start small. For instance, you could be running a hospital reputed for its heart surgeries. Now since payroll and IT arent among your core areas, outsource these first. 2. Are there enough external service providers available in the market? Its fairly intuitive: the more providers there are in the market, the better position you are in for negotiating a deal. Besides, it also allows you the option to switch, if the need arises. 3. Are you convinced about the quality? Ensure that the quality of service offered by the provider is at least better than what you already had in-house. Scrutinize the service providers track record and speak to a few of his clients. 4. Are you getting the benefits of scale economies? Outsourcing offers sustained cost savings by aggregating the business from different clients. So if it doesnt work out cheaper, the service provider probably isnt leveraging scale or may be your in-house costs are lower. 5. Is your corporate culture ready for it? Outsourcing demands a high level of trust and a spirit of partnership. Most organizations tend to be uncomfortable with the idea of losing control over their operations. To reduce the anxiety levels, make sure the outsourcer truly understands the products and markets served by your firm. 6. Are you building a relationship for the long term? Dont look at it from a one-to-two-year perspective. Plan for the long term. See whether the outsourcer can grow with you in case you expand operations or of global. Check to see if its systems and people can be scaled up quickly. The Outsourcing pyramid 6
Level 1: The commodity level. This is the cost reduction phase where the company gains no strategic initiative. Skill level needed are basic as the processes outsourced are catering, security, fleet management etc. Level 2: Moves into areas where company can gain strategic initiatives and skill levels get higher, but the processes are still routine. These include pay-roll and HR administration. Level 3: At this level, the outsourced processes require high level of skills and can directly affect bottom lines. The areas would include management and R & D.
DISADVANTAGES OF BPO
1.Hampers confidentiality: There is always a risk of information being leaked out to competitors.
2. Potential Competition: The outsourcer may start business in competition with the outsourcee due to outsourcing over a period of time. 3. Sweat Shopping: The outsourced may be accused of unfair labour practice because the outsourcer indulges in exploitation of labour in his own country. For example, the outsourcer may employ child labour and women on low wages. 4. Resentment: Outsourced may have to face resentment in his own country because people feel hat outsourcing is reducing job opportunities for the local citizens.
WHY OUTSOURCE
1. Expertise: Not all banks, especially the smaller ones, have the expertise needed to manage a complex network of ATMs. 2. Costs: Better cost management lowers currency-carrying costs, which is one of the biggest costs of running ATMs. 3. Service: Round the clock and remote monitoring helps minimize outages and thus provide better customer service. 4. Upgrades: A service provider is able to provide state-of-the-art tools, diagnostics and ATM knowledge as technology evolves.
3. Courier Services: Courier Service is essentially postal service provided by private firms. Couriers carry letters and parcels at low charges and deliver them more quickly and safely than post office. Business firms hire couriers to send letters, documents and samples of products from one place to another. Couriers offer desk-to-desk service under which the articles to be dispatched are picked up from the senders place and delivered to the receivers place. A large number of courier service firms have come up in big cities and towns. They are doing brisk business.
4. Customer Support Services: Producers and sellers of durable house-hold products such as washing machine, air conditioners, television sets, etc. are required to provide after sale services to their customers. Prompt, courteous and effective after sale services is essential for survival and growth of business in this competitive world. Large companies may have their own customer support service departments. Alternatively, they may outsource customer support services to outside agencies. These agencies are experts and can ensure complete customer satisfaction and theory enhances the goodwill of the client companies. 5. Human Resource Services: Several services concerning employees are now-a-days outsourced. Recruitment and selection, orientation and training, payroll administration, employee welfare services (E.g. transport and food for the staff) are examples of such services.
5. Establish a clear disputes- Resolution process to handle issues as they arise. This makes for smoother operation and does not make every issue a contractual or legal problem. 6. Monitor results for continues improvement. Arrange long term contracts on a yearly renewal basis, so there is an annual review of an outsourcers performance.
are cost, quality, technology and reliability. Companies are scaling up, looking at technology, tie-ups and quality certifications. In view of the vital role of BPO, Government of India has announced several policy initiatives and concessions to encourage the growth of the IT enabled outsourcing sector. The Indian software and in service industry under the leadership of the National Association of Software and Service Companies (NASSCOM) has also taken several steps to make India a global huge for outsourcing. Some of the steps taken by the Government and the industry for BPO are given below: 1. Foreign direct investment up to 100 percent of the equity has been permitted in BPO companies. 2. Duty free imports of capital goods (under the export promotion of capital goods scheme) For BPO sector have been permitted. 3. Government of India has promoted several Software Technology Parks (STPs) which offer ready-to-plug IT and telecom infrastructure. These parks also provide single legal window clearance for all regulatory procedures and formalities. STPs have been established in most measure cities across the country. 4. On the recommendations of NASSCOM, Government of India removed various procedural bottlenecks that were hampering the growth of BPO. 5. Under the Income-tax act, exemptions has been allowed on several IT enabled products and services.
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REFERENCES
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