Business Process Outsourcing

Now a days, Business Process Outsourcing or BPO is one of the hottest topic in Business.  A quick scan of the latest business headlines, gives the impression that everything is going offshore or is in the planning stage of going offshore. For basic IT (Information Technology) functions in India to leading edge R&D in China, the global reach of company operations seems to know no national boundaries.

"delegation of ownership, administration and operation" Business Process Outsourcing (BPO) is defined as the delegation of ownership, administration and operation of a business process or processes to a third party, or external service provider.

The external service provider, in turn, administers and manages the process or processes in compliance with some measurable performance metrics. The terms Information Technology Enabled Services (ITES) and BPO are often used interchangeably.

However, ITES involves outsourcing of business processes that can only be combined with Information Technology (IT). Such services are delivered through a telecommunication or data network or other electronic media.

There are two main catalyst for this new interest in going offshore: improved international telecommunication infrastructure and lower professional labor cost.

Where Companies are going?
India isn't just the world's preferred technology outsourcing destination: it's a global benchmark for outsourcing today.

"global benchmark for outsourcing"

The Gartner Group in May 2002 had ranked Canada high for application outsourcing, BPO and contact centers, Ireland for packaged applications, localization and product development, Israel and Russia for high-end software, China for embedded software and hardware services, and the Philippines for BPO, contact centers and animation. India was rated high for application outsourcing, IT outsourcing, BPO and product development.

 

Forrester Research predicts that over 70% of outsourced jobs will move to India, the Philippines and China.

 

And how Companies are going?

Rather than outsourcing their business processes to third party vendors, most companies 54% favor owning and managing their offshore function.

What it means to India?

The research estimates expect the global BPO market to grow to US$600 bn by 2005, US$ 1.1 trillion by 2006 and even US$140 bn by 2008.

The size of the Indian BPO industry in FY2003 was US$2375 mn, an increase of 61% over the previous fiscal. In rupee terms, the market size was Rs. 117 bn, an increase of 65% over the previous fiscal. The CAGR of the Indian BPO market (in rupee terms) during FY1999-2003 was 62%.

Significantly, the expected growth rate for the India is the highest among the three regions, and is likely to be driven by the segments of HR, engineering, finance & accounting, and purchasing.

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