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Know what is BPO,Outsourcing,offshoring..........and all

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#1 TheLeader

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Posted 20 June 2006 - 01:08 AM

Now it's time for us to know abt things like BPO,Outsourcing,Offshoring..........

INDIA is leading in all these respects and we ppl shud know what they are......

Many of our s/w companies...........are leading in these......and making INDIA the number1........

So lets know abt these things.....

#2 TheLeader

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Posted 20 June 2006 - 01:12 AM

Business process outsourcing

Business Process Outsourcing (BPO) is the leveraging of technology or specialist process vendors to provide and manage an organisation's critical and/or non-critical enterprise processes and applications. The most common examples of BPO are call centres, human resources, accounting and payroll outsourcing. Business process outsourcing may involve the use of off-shore resources.

Use of a BPO as opposed to an application service provider (ASP) usually also means that a certain amount of risk is transferred to the company that is running the process elements on behalf of the outsourcer. BPO includes the software, the process management, and the people to operate the service, while a typical ASP model includes only the provision of access to functionalities and features provided or 'served up' through the use of software, usually via web browser to the customer.

The following are the world leaders in BPO.

* Business process outsourcing in India
* Business process outsourcing in the Philippines

#3 TheLeader

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Posted 20 June 2006 - 01:21 AM

Business process outsourcing in India

The business process outsourcing industry in India has grown by leaps and bounds and as its size increases so does its competitive advantage. Compared with 1996 when this Industry had started inroads into the United States with Outbound Tele-marketing campaigns, today the vehicle for these calls-the internet has become cheaper and more reliable for the average Indian business.

The business has boomed to the extent that many people are now BPO’s out of their cyber cafes and houses in New Delhi.

The sector witnessed considerable activity during 2004-05, including a ramping up of operations by major Indian and MNC players and stepped up hiring. The domestic BPO market, catalyzed by demand from the telecom and BFSI segments, matched the growth of BPO exports. The market experienced maturity and consolidation, a result of numerous mergers and acquisitions taking place within the sector. There were over 400 companies operating within the Indian BPO space, including captive units (of both MNCs and Indian companies) and third-party services providers.

The Indian BPO industry remains on a growth path, emerging as one of the key investment markets in the country.

Figures from a recent survey carried out by PricewaterhouseCoopers

* Global BPO Market by Industry

Information Technology 43%
Financial Services 17%
Communication (Telecom) 16%
Consumer Goods/ Services 15%
Manufacturing 9%

* Global BPO Market by Geography

United States 59%
Europe 27%
Asia-Pacific (incl. Japan) 9%
Rest of the World 5%

* Size of Global Outsourcing Market

2000 USD$ 119 Billion
2005 USD$ 234 Billion
2008 (est.) USD$ 310 Billion

* Size and Growth of BPO in India

Year Size (US$ Bn) Growth Rate
2003 2.8 59%
2004 3.9 45.3%
2005 5.7 44.4%

Currently the Indian BPO Industry employs in excess of 245,100 people and another 94,500 jobs are expected to be added during the current financial year (2005-2006)

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* Call Center Employee cost

USA US$ 19,000 annually
Australia US$ 17,000 annually
Philippines US$ 9,050 annually
India US$ 7,500 annually

Nearly 75% of US and European multinational companies now use outsourcing or shared services to support their financial functions. 72% of European multinational companies have outsourced financial functions over the past two years.

Additionally, 71% of European companies and 78% US companies plan to use these services in the next 12-24 months. Overall, 29% of US and European companies expect to increase their use of outsourcing of financial functions, with spending expected to be nearly 16% higher than current levels.

Growth in this sector will get a further impetus as Indian BPO companies have robust security practices and emphasis is laid in developing trust with clients on this score. While earlier there were varying quality standards on this aspect, today there is focus on standardization of security, such as data and IP security.

#4 TheLeader

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Posted 20 June 2006 - 01:23 AM

Cities that are leading BPO-ITeS hubs in India today:

* Bangalore
* Chennai
* Hyderabad
* Mumbai
* NCR (Gurgaon, Noida, Faridabad, Greater Noida)
* New Delhi
* Pune

These are Tier I cities that are leading IT cities in India

With rising infrastructure costs in these cities, many BPO's are shifting operationsto Tier II cities like:

Ahmedabad, Amritsar, Chandigarh, Indore, Jaipur, Kanpur, Kochi, Kolkata, Mohali and Nagpur.

Tier II cities offer lower business process overheads compared to Tier I cities, but may have a less reliable infrastructure system which may hamper dedicated operations. The Government of India in partnership with private infrastructure giants is committed to bringing all around development and providing robust infrastructure all over the nation.

#5 TheLeader

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Posted 20 June 2006 - 01:34 AM


Outsourcing (or contracting out) is often defined as the delegation of non-core operations or jobs from internal production within a business to an external entity (such as a subcontractor) that specializes in that operation. Outsourcing is a business decision that is often made to lower costs or focus on competencies. A related term, offshoring, means transferring work to another country, typically overseas. Offshoring is similar to outsourcing when companies hire overseas subcontractors, but differs when companies transfer work to the same company in another country. "Outsourcing" became a popular buzzword in business and management in the 1990s.

Outsourcing is defined as the management and/or day-to-day execution of an entire business function by a third party service provider.

Outsourcing and/or out-tasking involve transferring a significant amount of management control to the supplier. Buying products from another entity is not outsourcing or out-tasking, but merely a vendor relationship. Likewise, buying services from a provider is not necessarily outsourcing or out-tasking. Outsourcing always involves a considerable degree of two-way information exchange, co-ordination, and trust.

Organizations that deliver such services feel that outsourcing requires the turning over of management responsibility for running a segment of business. In theory, this business segment should not be mission-critical, but practice often dictates otherwise. Many companies look to employ expert organizations in the areas targeted for outsourcing. Business segments typically outsourced include information technology, human resources, facilities and real estate management, and accounting. Many companies also outsource customer support and call center functions, manufacturing and engineering. Outsourcing business is characterized by expertise not inherent to the core of the client organization.

The overhead costs of customer service are typically less where outsourcing has been used, leading to many companies, from utilities to manufacturers, closing their in-house customer relations departments and outsourcing their customer service to third party call centers. The logical extension of these decisions was of outsourcing labor overseas to countries with lower labor costs, this trend is often referred to as offshoring of customer service.

Due to this demand, call centers have sprung up in Canada, China, Eastern Europe, India, Sri Lanka, Israel, Ireland, Pakistan, Philippines, and even the Caribbean. Many companies, most notably Dell and AT&T Wireless, have gained significant negative publicity for their decisions to use non-United States labor for customer service and technical support; one of the most prominent complaints being the expectation that the replacement staff will have more trouble communicating with customers.

A related term is out-tasking: turning over a narrowly-defined segment of business to another business, typically on an annual contract, or sometimes a shorter one. This usually involves continued direct or indirect management and decision-making by the client of the out-tasking business.

The term "outsourcing" became more well known largely because of a growth in the number of high-tech companies in the early 1990s that were often not large enough to be able to easily maintain large customer service departments of their own.
In some cases these companies hired technical writers to simplify the usage instructions of their products, index the key points of information and contracted with temporary employment agencies to find, train and hire generally low-skilled workers to answer their telephone technical support and customer service calls. These agents generally worked in call centers where the information needed to assist the calling customer was indexed in a computer system. The agents were often not able to tell the customer they did not actually directly work for the original manufacturer. In some cases, the agents are not allowed to even give out their real name.

#6 TheLeader

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Posted 20 June 2006 - 01:37 AM


Offshoring can be defined as relocation of business processes to another country, especially a country overseas. This includes any business process such as production, manufacturing, or services.

Offshoring can be seen in the context of either production offshoring or services offshoring. After its accession to the WTO, China emerged as a prominent destination for production offshoring. After technical progress in telecommunications improved the possibilities of trade in services, India is a country leading in this domain.

The economic logic in offshoring is the same as in the division of labor in general. Between workers having different skills, letting workers focus on their skill set means more goods and services for all. If some people can use some of their skills more cheaply than others, then those people have the comparative advantage. That is the idea that countries should freely trade the items that cost the least for them to produce. In neoclassical economic theory, this will provide for more goods and services for all, and at a lower cost. In Marxian economic theory, this process is assumed to raise the rate of exploitation and result in a more unequal distribution of wealth and income. In other words, some benefit from the process, either directly or indirectly, while others may be worse off.

#7 TheLeader

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Posted 20 June 2006 - 01:38 AM

Offshore outsourcing

Offshore outsourcing is the practice of hiring an external organization to perform some or all business functions in a country other than the one where the product or service will be sold or consumed. It can be contrasted with offshoring, in which the functions are performed in a foreign country, whether by the foreign subsidiary of the same company or a third-party. Opponents point out that this sends work overseas, thereby reducing domestic employment and domestic investment. Many jobs in the infotech sectors - such as data entry, computer programming, and customer support - have been or are potentially affected.

The general criteria for a job to be offshore-able are:

* The job does not require direct customer interaction;
* The job can be telework;
* The work has a high information content;
* The work can be transmitted over the internet;
* The work is easy to set up;
* There is a high wage difference between the original and offshore countries;
* The work is repeatable.

The driving factor behind this development has been the need to cut costs during the recession that began before the events of September 11, 2001 and deepened since then, while the enabling factor has been the global electronic network that allows digital data to be accessed and shipped instantly, from and to anywhere in the world.

Some of the major countries that provide such services are India (Programming and IT), Russia (Programming and R&D), Bulgaria (Programming and R&D), Ukraine (Programming and Design), Romania (Programming and IT), the Philippines (Data Entry and Customer Support), China (Programming), Brazil (solution providers) and many others.

The advent of the Internet has enabled individuals and small businesses to contract freelancers from all over the world to get projects done at a minimum cost. This trend runs in parallel with the tendency towards big corporations' outsourcing, and may in the future serve to strengthen small business' capacity to compete with their bigger competitors capable of setting up offshore locations or of arriving at major contracts with offshore companies. See Freelancing on the Internet.

There are different views on the impact on society, which reflects the attitude of Protectionism versus Free Trade. Some see it as a potential threat to the domestic job market and ask for government protective measures, while others (and not just corporations) see it as an opportunity.

#8 TheLeader

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Posted 20 June 2006 - 01:40 AM

Outsourcing, Offshoring, and Offshore Outsourcing

Note that “outsourcing,” “offshore outsourcing,” and “offshoring” are used interchangeably in public discourse despite important technical differences. To be consistent, “outsourcing,” in corporate context, represents an organizational practice that involves the transfer of an organizational function to a third party. When this third party is located in another country the term “offshore outsourcing” makes more sense. “Offshoring,” in contrast, represents the transfer of an organizational function to another country, regardless of whether the work stays in the corporation or not. In short, “outsourcing” means sharing organizational control with another organization, or a process of establishing network relations within an organizational field. "Offshoring,” on the other hand, represents a relocation of an organizational function to a foreign country, not necessarily a transformation of internal organizational control.

#9 ChEeKy ChApPy

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Posted 20 June 2006 - 01:46 AM

gr8 post buddy....... :)

#10 tatisamrat


    I m here to gather info

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Posted 01 November 2006 - 07:20 PM

gr8 post buddy....... :)

hi, this is samrat. all these i had a small confusion, but now i got a clear info about all these.
thank you. and you have provided sufficient info on this Good collection.

#11 lominatorasol



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Posted 16 September 2011 - 06:30 PM

It is indeed good to learn and share insights and I hope that would be a common ground for any of us.

Does anyone know this blog, just heard of the term offshore and was wondering what it is, still not sure...
Offshore Company Formation

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