Outsourcing

Kartik Rao
Pradeep Kumar Singh

(XMBA – 11)

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Introduction
Business Process Outsourcing(BPO) is the act of
giving a third party the responsibility of running what
would otherwise be an internal service. For instance,
an insurance company might outsource their claims
processing program or a bank might outsource their
loan processing system. Other common examples of
BPO are call centers & payroll outsourcing.

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Business Process Outsourcing
industry in India refers
The Services Outsourcing Industry, catering mainly
to Western Operations of MNC’s (Multinational
Corporations).

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The Sector Witnessed
 Considerable activity during 2004–05, including a ramping up of
operations by major multinational corporations players and Indian
organizations stepped up hiring.

 The domestic BPO market, catalyzed by demand from the

telecommunications and BFSI segments, matched the growth of
BPO exports.

 There were over 400 companies operating within the Indian BPO
space, including captive units (of both MNCs and Indian companies).

 The key enabler for this has been cheaper bandwidth leading to low
telecom costs for leased lines and availability of educated English
speaking workforce in India.

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The idea of outsourcing has its
roots
 ‘Competitive Advantage' theory propagated by
Adam Smith in his book 'The Wealth of Nations'
which was published in the year 1776.

 Over the years, the meaning of the term

'outsourcing' has undergone a sea-change. What
started off as the shifting of manufacturing goods
to countries providing cheap labor during the
Industrial Revolution, has taken on a new
connotation in today's scenario.

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Reasons for Outsourcing
Reason Savings
 Cost reduction 43%
 Focus 35%
 Access to special enterprise 32%
 Resource related reasons 51%
{relieve resource constraints, reduce IT
staff and augment IT staff}

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What exactly does the BPO
market comprise
There is a disagreement as to what exactly
constitutes BPO. With the rapid expansion of the
BPO industry and the extent of its reach, it is
becoming increasingly difficult to define what a BPO
exactly means.
It encompasses a wide variety of activities such as
human resource, accounting, financial research,
marketing, sales, legal work, logistics and so on.
Software services are also regarded as a part of the
BPO market by many firms.

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Outsourcing Process

Development Off-Shore

User

Assessment Implementation
& Delivery
On-Site
On-Site
Off-Shore

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WHY INDIA
 India has made a strong niche for itself in this space

 Its undeniable advantages in the size of its talent pool and the cost
& time differential.

 India ranks high in areas such as qualifications,

capabilities, quality of work, linguistic capabilities and work ethics.

 Thus is ahead of competitors such as China, Philippines, Ireland,

Australia, Canada etc.

 In specific BPO categories, Indian centres have achieved higher

productivity levels-for example, the number of transactions per hour
for back office processing, than their Western counterparts.
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WHY INDIA
 India is able to offer a 24x7 service and reduction in turnaround
times by leveraging time zone differences.

 About 100,000 engineers graduate from India every year. Many

of these engineers are employed with call centres for
troubleshooting and providing technical support at salaries that are
dramatically lower compared to the pay scales in the US.

 The average monthly salary in India is $400-700 compared to

$2,700-2,800 in the US.

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Examples of Outsourcing
1. Call Centers

a. Inbound Calls

b. Outbound Calls

2. Payrolls

3. Manufacturing

4. Software Development

5. And many more…

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Call Center Outsourcing
Reason for Call Center outsourcing are
1. The upscale rise amongst the entrepreneurs who are trying to allure their
customers through inbound and outbound calling facility.

2. Good English speaking community with technical vibrancy with cost-

effective workforce.

3. Alleviate Pain of back office operations to find more time for the prospective
growth of the companies.

4. Technically literate staff and comfortable with new technologies arising in

the industry.

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Payroll Outsourcing
Reason for payroll outsourcing are
1. Avoid IRS Penalties

2. Reduce Costs

3. Alleviate Pain

4. Offer Direct Deposit

5. Free Up Free Time

6. Avoid Technology Headaches

7. Leverage Outside Payroll Expertise

8. Avoid Payroll Knowledge Walking Out the Door

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Conclusion
 Significant Benefits

 30%-60% Bottom Line Cost Savings

 Better Product Quality

 Faster Execution Speed

 Greater Staffing Flexibility

 Proven Process Methodology, Roles & Activities

 Measurable and Immediate Benefits.

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