BPO: Business Process Outsourcing

Leanna Dertinger, Jana Earnshaw, Mitsuru Kajio,

Jesse McShane & Simon Seid
Terminology
• Outsourcing
• Offshoring
• BPO
• ITO
• Fragmentation
History of BPO
• World War II
– Increased international trade
• 1960s – 1980s
– Importing turns to outsourcing
• 1990s – Present
– Services now outsourced
– BPO begins
HP Goes The Distance For P&G
• Corporate Culture & Brand
• Finance and Accounting
• Bangalore & Mumbai, India
• Global Customers w/ Local
Support
• Core Competencies cut
Defects
Global Accounts Payable Processing
BPO Advantages
• Productivity Improvements
• Cost Savings
• Improved HR
• Focus on Core Business Competency
• Increased Capability
Benefits
BPO Disadvantages
• Recent Studies
• Knowledge Disappears and is Transferred
to the Outsourcing Partner
• Poor Quality Control
• Restoring Operations is Complicated
• Lack of Loyal Employees
• Reduction in Strategic Alignment
Video
Why BPO in India?
• Language
• Education
• Quality
- Communication
- No pirated products
• If Chinese Government Policy changes, what will
happen?
- Turning point will be by 2010
Comparison: India versus China
India China
• Educational System • Educational System
• Cost Advantage • Cost Advantage
• Time/Distance Advantage • Time/Distance Advantage
• English proficiency • Close to Japan
• Government Support
• Quality
• Labor Pool
Matching Process to Market
India China
• Development of • Manufacturing of
software components
• Call center • Japanese IT
– IBM Companies
Source: BusinessWeek, The Future of Outsourcing
Hot Players in Outsourcing
Business Services Software Development Call Centers

1. Hewitt Associates (U.S.) 1. Tata Consultancy Services (India) 1. Convergys (U.S.)

2. ACS (U.S.) 2. Infosys Technology (India) 2. Wipro (India)

3. Accenture (U.S.) 3. Wipro (India) 3. ICICI One Source (India)

4. IBM (U.S.) 4. Accenture (U.S.) 4. ClientLogic (U.S.)

5. EDS (U.S.) 5. IBM (U.S.) 5. 24/7 Customer (India)

6. Hewlett-Packard (U.S.) 6. Cognizant Techonology Solutions (U.S.) 6. SR.Teleperformance (France)

7. Wipro (India) 7. Satyam (India) 7.e Telecare International (U.S.)

8. HCL Technologies (India) 8.Patni Computer Systems (India) 8. SITEL (U.S.)

9. Tata Consultancy Services (India) 9. EDS (U.S.) 9. Teletech (U.S.)

10. WNS Global Services (India) 10. CSC (U.S.) 10. CustomerCorp. (U.S.)

Source: BusinessWeek, The Future of Outsourcing

5 Managerial Steps That Pay Off
1. Go Offshore for the right reasons
• Shifting a broken process overseas may not fix it
2. Choose your model carefully
• Could cost more…..(I’ll fix this part)
3. Get your people on board
• Employees and middle managers can make the bold
move happen….or stop you in your tracks
5 Managerial Steps That Pay Off
4. Be prepared to invest time and effort
• Often what is lacking in offshore partners is a lot of
deep process knowledge
5. Treat your partners as equals
• Telling your partners exactly what to do and how to
do it is not conducive to the entire process
Examples
• Penske and India’s Genpact
• Eli Lilly
 Sources
• Gibson, Stan. “HP Goes DistanceFor P&G,” eWeek, 3/20/2006, Vol. 23
Issue 12, p49-52, 3p.
• “A world of work,” The Economist, November 13, 2004, pp. 6-7.
• Booton, Bob (2005). Outsourcing in a box. San Jose, CA: Bidness Books
Publishing.
• Engardio, Pete, "The Future of Outsourcing," Business Week, January
30,2006. pp. 50-58.
• Kripalani, Manjeet, "Five offshore practices that pay off," Business Week,
January 30, 2006. pp. 60-61.
• http://economictimes.indiatimes.com/articleshow/1468167.cms
• http://www.behtimes.com/article/123/7/
• http://us.rediff.com/money/2004/jan/08bpo.htm
• http://globalconnect.ucsd.edu/taipei/documents/Inter-
RegionalPartnershipsAnIndiaPerspective.pdf
• http://www.cyfuture.com/business-process-outsourcing.htm
• http://www.bpoindia.org/
• http://www.xicom.biz/research.html
• http://www.networkworld.com/news/2004/0407updatibm.html
• http://encarta.msn.com/encyclopedia_701702628/Outsourcing.html