2. Business Process Outsourcing Defined
History of BPO
BPO Trends
Benefits of BPO
Disadvantages of BPO
Reasons for Outsourcing
BPO Models
Outsourced Processes
3. This is when a company contracts an outside
provider for services or business processes.
This might include manufacturing or back-office
functions such as accounting and human
resources
4. WWII
- Increased international trade
1960s – 1980s
- Importing turns to outsourcing
1990s – Present
- Services now outsourced
- BPO begins
5. BPO Trends
Short term contracts
In-sourcing
Outsourcing in emerging and developing markets
Process and Best of breed outsourcing
Outsourcing centers of excellence
6. Benefits of BPO
Cost Reduction
Focus on core areas
Avoid capital expenditures
Assurance of best practices, skills, and technology
Revenue Increase
7. Disadvantages of BPO
Risk of exposing confidential data
Synchronizing the deliverables
Hidden Costs
Lack of customer focus
8. Globalization Technology Economic downturn
• Lower cost • Rapid advances in • Stagnating top
competitors technology and lines
information
• Focus on core • Bottom line
competencies • Sharp decline in pressures
telecommunication
cost • Economies of
scale
9. Reasons for Outsourcing
Cost Advantages
Innovation and speed to market
Increased customer satisfaction
Economies of Scale
Skill level, Quality of Service
10. Transactional • Handles one aspect of process only
BPO • Customer owns risk of process
• 3-4 aspects of a process
Niche BPO • Vendor and buyer share risk of process
• Handles both transactional and
Comprehensive administrative task
BPO • Takes 70% responsibility of the output
11. Finance Information Technology
BPO
Order Processing Human Resource
Warehouse
Distribution
BPO Business ModelsOver the years, different models have been used for conducting business in BPO. The regular outsourcing models of on-shoring, near-shoring and offshoring are seen in BPO as well. TPI, a sourcing advisory, has observed that in addition to on-shoring, near-shoring and offshoring, BPO operations are also conducted through the following threebusiness models :• Transactional BPO: Transactional BPO handles one aspect of a process only. The customer has to carry out a significant part of the process in-house and hence the customer owns the risk of the process. Also, outsourcing many aspects of the process in a transactional mode leads to complex fragmentation which can pose as a threat to productive delivery.• Niche BPO: A niche BPO carries out 3-4 aspects of a process. A niche BPO, which also makes certain investments in the customer's process, aims at improving the efficiency of the process. The vendor in a niche BPO works in close coordination with the buyer, sometimes seeking the services of the customer's employees. Both the vendor and the buyer share the risk of the process.• Comprehensive BPO: A comprehensive BPO handles both transactional and administrative tasks in a process and takes 70 percent responsibility of the output. The vendor purchases the buyer's assets and also hires most of its employees. Comprehensive BPO has bulk deals lasting for 7-10 years.