Business process outsourcing

In business process outsourcing (BPO), a specific business function is outsourced to a third party service provider. Earlier, manufacturing firms used to opt for business process outsourcing. But nowadays, service oriented firms contract operations of a business function to third party service providers.

Classification of BPO

BPO can be classified under two categories: back office outsourcing and front office outsourcing. Back office outsourcing involves business functions like billing and purchasing. Front office outsourcing includes functions like marketing and technology support.

Offshore and onshore

Onshore business process outsourcing is a term used when work is outsourced to a service provider located in the same country. Contrary to this we have offshore business process outsourcing where work is outsourced to a company located in a different country.

Size of BPO industry

According to McKinsey, global business process outsourcing industry is estimated to be worth about $122- $154 billion. Major business operations and functions outsourced to third party service providers include retail banking, insurance, finance, accounting and HR, and travel or hospitality.

Top BPO destinations

Top BPO destinations in the world include countries like India, Philippines, Morocco, Egypt, and South Africa. Business operations and functions are also outsourced to China and Eastern European countries. India accounts for about 5-6 percent of total BPO industry. But it holds a lion’s share (63%) as far as offshore division of BPO industry is concerned.

BPO industry in India

Offshore BPO earns about $10.9 billion of revenues for India. IT and total BPO revenue in India is predicted to cross $30 billion in 2008. India’s revenues from offshore BPO has dipped from 70 percent of total offshore work to about 63 percent.

Major BPO companies in India

Major BPO companies in India include Genpact, WNS Global Services, Transwork Information Services, IBM Daksh, and TCS BPO.

Challenges

BPO industry has to deal with various challenges in order to sustain its growth. Due to lack of talented and skilled manpower, BPO industry is always on the lookout for suitable candidate. This leads to high attrition levels within the industry. Other problems that plague BPO industry include reckless start-ups and poor infrastructure.