BPO: Driving Major Shift in Business Module
The challenge is to first observe and diagnose the latent socio-cultural perspective of society, and see how the target customer fits in there

ABSTRACT
Business Process Outsourcing is driving a major shift in business modules by retaining all major corporate functioning and offering distinct services. Some of the critical success factors for BPO are cross-functional expertise, technology competence, process bureau and a strong SLA.

1. Introduction
Business Process Outsourcing (BPO) is the delegation of the Ownership, Administration, and Operation of a process to a third party. Many people see it as an evolution from Information Technology Outsourcing (ITO). Some believe BPO will envelop ITO, even though the two are very different. ITO is about cost and service levels; BPO is about solving a business problem.
Another definition of BPO is “the strategic delegation of ‘non-core’ IT intensive business processes to an external provider that in turn manages the selected process(es) based upon defined performance metrics. Such processes may include; Administration; Finance and Accounting (F&A); Human Resources; Payment services; Logistics and distribution; Sales, marketing and customer care.

BPO aims to raise a client company’s shareholder value because it is about delivering outcomes— that is, higher-performing business processes. Companies essentially have three kinds of processes:

• Core processes (which give strategic advantage)
• Critical, Non-core processes (which are important but are not competitive differentiators)
• Non-core, Non-critical processes (which are needed to make the environment work)
• It is suggested to outsource core processes; and it is recommended to invest in them. But many do recommend outsourcing critical, non-core processes to providers who specialize in those processes because they will invest in them and aim to make them world-class. And most advisors recommend outsourcing all non-core, non-critical processes.
• But outsourcing does not mean handing over an entire process. Generally, it means turning over to a BPO provider the “how” aspects of a process— the systems, infrastructure, administration, execution, and some of the design of non-core processes. But retain the “what” aspects of the process— the governance, policy setting, decision-making, and strategy of these processes. The intent is to outsource the work while retaining the direction-setting part.

Companies generally outsource four types of processes:

• l Processes that link to suppliers (supply chain management)
• l Processes that link with customers (sales, marketing, and customer care)
• l Production processes (R&D, contract manufacturing)
• l Support processes (finance, HR)

2. BPO Vs ITO

ITO BPO (Table)

• IT outsourcing is a function based on technology Business processes are functions or processes that may or may not use technology
• IT is relatively new in most businesses and not always well understood Most business processes have been around for years and have developed in an haphazard fashion
• Many IT departments are not integrated into the rest of the business – therefore IT is easier to outsource Some business processes are discrete functions, but most are part of the underlying business
• IT outsourcing lends itself to a commoditised approach: - Many customers and vendors talk about “an out of the box” solution - IT is about standardisation BPO tends to be more varied - It is about very tailored solutions - Many customers choose a BPO vendor because of its IT platform
• Source: “BPO – Riding the next wave”, David Skinner, Shaw Pittman

3. Benefits of outsourcing

• Allows the organization to concentrate on its core activities
• Production volume based cost (pay only for useful quality work duly completed)
• Reduce HR Costs - salary bills, perks, employee benefits, administration overheads
• Reduce recruitment and training expenses
• Real time availability of data through online data warehousing
• Improve quality of service and productivity
• Greater accountability and transparency in production standards
• Get increasing volume of “paperwork” and routine administration work done quicker and at significantly lesser cost.
• 24 X 7 X 365 service availability

Percent citing each reason as a "very important" rationale for setting up BPO organization:
Focus on core competencies : 67.3%
Save money : 61.1%
Tap vendor domain expertise : 55.5%
Focus on strategic growth : 37.4%
Maintain/reduce head count : 34.6%
Redirect capital budget : 22.7%
Reduce assets on books : 7.6%
Other : 2.8%
Sources: CFO magazine and AMR Research

BPO Advantages
Globally, corporations are moving towards Business Process Outsourcing. There are several advantages that BPO offers to corporations who seek to move some of their processes to a BPO vendor.

Some of these advantages are:

• Cost cutting
• Releasing manpower to focus on core business activities
• Higher Quality of work and process efficiency in non-core areas

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