The Purpose Of Business Process Outsourcing

Business process outsourcing is a process, which the product or services is provided by the company, for the support of achieve the goal of main business in another organization, such a way that the process is economically reliable and effectively protect the quality and the cost. That may be split into two categories. Those are;

1. In -shoreline outsourcing

2. Offshore outsourcing

In-shore outsourcing

This can be an outsourcing process, which produce service or goods for the business by different makes in various locations within the same country. As an example, vehicle bearings for the Toyota Company are producing by Koyo bearing Company. Both companies are situated in Japan. However, Toyota customized in vehicle developing not in bearing processing and Koyo customized in bearing creation and designing. Both companies are receiving benefit from producing exceptional ultimate product at competitive price. Airline industry is also one of the best examples because of this. They sell travel tickets for a few destinations, that they do not soar. For example, English Airways normally do not journey to Sri Lanka, as it isn't a profitable vacation spot for them. However, they sell tickets to Sri Lankan vacation spots web page link with the Cathy Pacific airways. By doing this they do fulfill the customer and at the same time they are simply making the earnings. In such a business process, both British Airways and Cathy Pacific get win-win situation and reciprocally beneficial the business culture.

Offshore outsourcing

Simplest interpretation of the offshore is "Any country apart from your own country". In just offshore outsourcing companies in developed countries export, IT related work from growing countries, which are politically stabilized, and has the lower labour cost. This type of outsourcing has turned into a reality because of the globalization.

Nowadays almost all of the organizations are employing offshore outsourcing as a weapon to contend with their competition. Competition among the business enterprise organizations are growing rapidly day-by-day and therefore reducing the expense of the products and services and increasing the efficiency makes the organisations to gratify their customers and stay strong in the business environment. At the same time, host country is benefited from this, as they don't want to spend huge amount of cash in training personnel and motivation staff. In short, they can cut the higher level of labour cost.

On the other hand, offshore outsourcing helps organizations to give more attention on their main process such as, merges & acquisitions, sales, business expansions and quality of the merchandise. When the companies are having enough resources and time, they can achieve their targets without placing much effort on it.

Offshore outsourcing has turned into a requirement of the banking sector within Asia and Gulf region. Software outsourcing and call centres have grown to be more popular during the last decade. Ever since the term just offshore outsourcing has come into the topic, it shows the constant expansion in both value and amount.

Call Centres and its own result to the coordinator country

Call centres are crucial components of many large businesses. Although some firms choose to produce inner call centres, many now purchase call centre support services from other organizations. In a typical outsourcing arrangement, a firm (the client) hires a call centre specialist (owner) to provide sufficient technology and personnel to provide the client's customers. Your client specifies the grade of service and the financial conditions in an in depth contract, which may include queuing performance conditions (e. g. 80% of callers wait around significantly less than 20 sec. ), client satisfaction requirements(as measured by surveys or discovered by monitoring phone calls), and financial rewards and penalties. Motivated by contracts employed by one large merchant, then how the terms of real world call centre outsourcing contracts affect the capacity investment decisions of owner as well as the financial performance of your client, vendor, and the system all together.

Global business environment is very competitive and volatile. Business organisations cannot be survived without reducing the expense of product or service. Because of that reason, it is natural that, almost all of the business enterprise organizations are have a tendency to minimise the cost and do search engine optimization of the source allocations. Business world is includes many large as well as medium and small size of business firms. All the sectors are looking forward to grow faster with the reduced amount of the cost. In order to done the product quality work by the reduced cost of these are using off shoreline outsourcing centres. However, not only the costs but also there are a great many other factors, which have the influence of becoming this concept a far more popular. The major known reasons for the outsourcing of low priced locations can be described as follows.

The major reason is it reduces the production cost of goods and services. Second you are, it can be raise the capacity of the production, by placing the same work because it can be high profit within the own company. However, outsourcing can produce more products with less expensive. This implies using same cost, we can produce more products. Third one is it is low risk and low investment for the starting of new product or expanding existing product. The other reason is the fact, it can help to expand the business without encumber of high investment or less cost of capital. It can create the dominant on the market with competitive prices and whatever the high price pressure and without gaining heavy deficits.

Off shore locations are the most common business process outsourcing (commonly known as BPO) practice generally in most business organizations located in the developed countries like United States, European Economical Countries (EEC), Canada and Japan. Their call centres are found in most growing countries like Maxico, India, China and Thailand.

According to one of the samples published on the market mag, an American business organizations could be conserve to 10 % by attending to the local US Spanish-speaking market, it outsourcing its call centres to Latin American countries like Mexico instead of inside the United States. Alternatively, it could be save up to twenty percent to forty Percent if its situated in India, Philippines and South Africa. (Call Centre Publication 2009 Sept). Because of this reason, most business organizations have a tendency to find their call centres in off shore countries.

Average Total annual Salaries of Call Centre Operator

According to the data which have been accumulated from the Gartner in the year 2007 (Gartner is one of the most significant Information Technology research and evaluation firms in america) the majority of the information technology related business organizations will either be investigating the possibility to outsourcing techniques their part of business or have already outsourced some work overseas through call centres. It is nearly 60% of the complete information technology business in the United States alone.

HSBC (Hong Kong and Shanghai Loan company Corporation Small) call centres get time difference advantage for their customers. HSBC is facilitated their bank service to all the customers in a day in 365 days. Their getting in touch with centres located in low cost locations like India, Sri Lanka, Argentina, Poland, Peru, Egypt and Mexico. HSBC can offer exceptional banking service at all times in all over the world. As an example in London customer desires to copy money to another consideration or any bank service at early morning five a clock it can operate from the decision centre in Sri Lanka. The decision automatically attaches to the appropriate call centre and for doing customer demand within short time. Using this type of service business organizations can provide better customer service and client satisfaction while spending less overall and increasing the image of the business enterprise. By providing the best service at constantly throughout the year more volume of customers will entice towards the business and at the same time existing customers won't go for any alternatives because they are pleased with the service they are receiving.

Most of the business enterprise organizations tend to formulate proper outsourcing programs to assessing the comparative and risks of earning or buying, companies can leverage their skills and resources for increased success. By making tactical plans, organizations are willing to make use of their resources to acquire better rewards.

According to the James Brian et. al "You will find two main strategies of outsourcing methods is seen in the present business environment. When properly mixed those, allow professionals to leverage their companies' skills and resources well beyond levels available with other strategies:

Concentrate the firm's own resources on a couple of "key competencies" where it can perform definable pre eminence and offer unique value for customers

Strategically outsource alternative activities - including many typically considered essential to any company - that the company has neither a critical tactical need nor special capacities.

As an example, two different Australian and United Areas companies can be illustrated in this aspect of view:

Nike, Inc. is the greatest supplier of athletic shoes in the world and it outsourcers completely of its shoe development and produces only key technical components of its Nike Air system. Athletic footwear is technology- and fashion-intensive, necessitating high versatility at both development and marketing levels. Nike creates maximum value by concentrating on pre development (research and development) and post-production activities (marketing, syndication, and sales), associated together by perhaps the best marketing information system on the market. Utilizing a carefully developed, on-site "expatriate" program to coordinate its foreign-based suppliers, Nike even outsourced the advertising component of its marketing program to Wieden & Kennedy, whose creative initiatives drove Nike to the top of the merchandise recognition scale. Nike grew at a compounded 2O percent progress rate and gained a 31 percent ROE for its shareholders through most of the past 10 years.

Knowing it might not be the best at making chips, bins, monitors, cables, keyboards, and so on because of its explosively successful Apple II, Apple Computer outsourced 70 percent of its manufacturing costs and components. Instead of building internal bureaucracies where it acquired no unique skills, Apple outsourced critical items like design (to Frog design), printers (to Tokyo Electric) and even key elements of marketing (to Regis McKenna, which achieved a "$100 million image" for Apple when it acquired only a few employees and about $1 million to invest). Apple centered its inside resources on its own Apple DOS (Disk OPERATING-SYSTEM) and the supporting macro software to give Apple products their particular look and feel. Its open architecture policy stimulated impartial developers to create the much-needed software that gave the Apple II's customers exclusively high efficiency. Apple thus avoided unnecessary assets, benefited from its suppliers R&D and technical expertise placed itself flexible to look at new solutions as they truly became available, and leveraged its limited capital resources to an enormous extent. Functioning with an exceptionally flat organization, Apple enjoyed three times the capital turnover and the highest market value versus fixed investment proportion among major computer makers throughout the 1980s.

The call centres are the foreign immediate investment (FDI) of the number country. It's very interested study ramifications of foreign immediate investment (FDI) in the empirical books on host country. Multinationals are bigger and strong financial and tactical organisations, which have the capable of conducting more research and development, use advanced technology, and maintain higher standard and the pay higher wages than the domestic country. When the call centres set up in the coordinator country, automatically each one of these benefits transfer to them. For an instance, Vodaphone is one of the largest multinational mobile telecommunication companies. It is the second greatest mobile company in the united kingdom but their customer care call centres situated in India and other producing countries. They had done off shoreline outsourcing with the customer support call centres. The web host country India gets benefits. As they can decrease the unemployment and increase, the Per capita income and Gross Home Product (GDP) and they can increase the aggregate efficiency even without spending a single cent. These call centres buy equipment, and accessories from the local market. It indirectly increases the creation of local companies. The web host country employees obtain advanced training and career development program in international level. They are prominent advantages, which robotically gain from the mom company. Despite the fact that host country obtains these benefits, sometime a risk of job reduction in acquisitions of existing local call centres by new foreign company will there be. Sometimes business activities of these call centres can be influence the performance of the home business organizations. After considering a result of a survey, G¶rg and Greenaway (2004) concluded that, "However, the immediate effect which international entry has of bringing about an alteration in the structure of firms in the host country is less examined. As foreign organizations have a tendency to be larger plus more productive than domestic firms"

In the procedure of offshore outsourcing both business organizations obtain exceptional benefit which firm achieve cheap labour cost, skilled labour and quality product than the produce in their own country. Alternatively, number country gain job, forex and technology. Most of the multinational business company establishes their call centres in just offshore locations shows remarkable less absenteeism and worker turnover than in the own country. Because of these reason almost all of the multinational companies in the United Kingdom, United States and Europe, don't need to worry about keeping their workers by paying very high salaries, attractive incentives and lucrative advantage packages. As well as if the salaries are greater than the typical rate of the neighborhood country it is a lot lower than the uk, United States and Europe, due to this reason almost all of the larger organizations have a tendency to outsourcing their service to improve the profit percentage through the downsizing the cost.

On the other side, it can obtained benefit for different dialects speaking environment. For example most telecommunication companies in the United Kingdom, call centres are positioned in India. Their customers, who cannot speak British properly, can speak their own Indian terms. This is good for the both client satisfaction and the business enterprise point of view. In other example according to the Dave article on "The outsourcing Low cost lines" shows some job not acquire, expected benefit from the task and it take additional time and the cost than shown in original job report. Meanwhile the article of Grog Hogler and Aoife Hanley in economic and Interpersonal Review journal says that the impressive increase of profit can be shown in production industry.

However, some disadvantages and unwanted effects can also see available process outsourcing. Those are normal in global business environment. As there can be some drawbacks many countries, make political agreement to avoid business business and their customers. Among the main barriers in outsourcing in low priced locations is the fact, difficulty of energy correction or location correction. At the same time, delivery time and payments also can be a problem. In addition to that, if it is off shore outsourcing it could be undergoes to transfer tax and legislation, ethnical difference and business ethics and at the same time, enough time difference and the logistical issues should be expected.

The second example is the telemarketing doing utilizing the call centres. A lot of the multinational food and perfume companies are doing their special offers, marketing and selling by using call centres. A number of the companies have their own satellite to improve communication effectively, successfully and cheaply between them and their customers. For a good example super market, large Wall membrane Mart has their own satellite to use better communication between them and their customers. This plays negative impact to the number country or domestic business organizations, multinational business organisations can sell their product very low price while cannot compete the domestic businesses. Because of these reason local business organizations can't be survive and the neighborhood business may be suffer from the international call centres.


Production of goods and the selecting the service from the low cost locations has become an important way to obtain investment and development in many appearing economies. At the same time, almost all of the multinational and medium scale companies have already paid their focus on use of these services from low priced off shore outsourcing. There's a razor-sharp increscent in creating offshore call centres throughout the world in last few years. Especially in developing countries like, India and Sri Lanka as they actually have very cheap labour cost. (Not merely the labour cost is low but also in these countries, they actually have skilful, unemployed people those who are inclined to work these sorts of call centres. )Based on the Tomiura Eiichi, almost all of the companies are getting benefits from the low cost and the exceptional product performance.

However, corresponding to Holger G¶rg, every one of the off shoring outsourcers activities not acquiesce the predictable results. Then your choice of where you can locate offshore facilities is an important and intricate one that has substantial implication for both the investing organization and the coordinator country. The multinational companies choose their coordinator country using Data Envelopment Analysis (DEA). Based on the research done by Amiti, Mary and Shang-Jin Wei, they found that India, China, Pakistan, Slovakia, Mexico, Ireland, Netherland, Spain, Sweden and the uk are attractive locations for services outsourcing. These countries use their resources or input most efficiently in order to produce end result that makes them attractive for service out sourcing. Many of these host counties have at least one core-efficiency for creating core competency among the key inputs of wages, education and infrastructure.

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