Business Process OutsourcingBPO

OPS450Professor Ken Hogan

Terminology• Outsourcing• Offshoring• BPO• ITO• Fragmentation

History of BPO• World War II

• Increased international trade• 1960s – 1980s

• Importing turns to outsourcing• 1990s – Present

• Services now outsourced• BPO begins

HP Goes The Distance For P&G

• Corporate Culture & Brand• Finance and Accounting• Bangalore & Mumbai, India• Global Customers w/ Local

Support• Core Competencies cut

Defects

Global Accounts Payable Processing

BPO Advantages• Productivity Improvements • Cost Savings• Improved HR• Focus on Core Business Competency• Increased Capability

Benefits

BPO Disadvantages• Recent Studies• Knowledge Disappears and is Transferred to the Outsourcing

Partner• Poor Quality Control• Restoring Operations is Complicated• Lack of Loyal Employees• Reduction in Strategic Alignment

Videoshttp://www.youtube.com/watch?v=fSjjHpsaRKw (Very Funny)

http://www.youtube.com/watch?v=V5ndxIWnn4A (Serious)

Why BPO in India?

• Language• Education• Quality

- Communication- No pirated products

• If Chinese Government Policy changes, what will happen?- Turning point was 2010

Comparison: India versus China

India• Educational System• Cost Advantage• Time/Distance Advantage• English proficiency• Government Support• Quality• Labor Pool

China• Educational System• Cost Advantage• Time/Distance Advantage• Close to Japan

Matching Process to Market

India• Development of

software• Call center

• IBM

China• Manufacturing of

components• Japanese IT Companies

Source: BusinessWeek, The Future of Outsourcing

Business Process Outsourced

Hot Players in Outsourcing

Business Services Software Development Call Centers

1. Hewitt Associates (U.S.) 1. Tata Consultancy Services (India) 1. Convergys (U.S.)

2. ACS (U.S.) 2. Infosys Technology (India) 2. Wipro (India)

3. Accenture (U.S.) 3. Wipro (India) 3. ICICI One Source (India)

4. IBM (U.S.) 4. Accenture (U.S.) 4. ClientLogic (U.S.)

5. EDS (U.S.) 5. IBM (U.S.) 5. 24/7 Customer (India)

6. Hewlett-Packard (U.S.) 6. Cognizant Techonology Solutions (U.S.) 6. SR.Teleperformance (France)

7. Wipro (India) 7. Satyam (India) 7.e Telecare International (U.S.)

8. HCL Technologies (India) 8.Patni Computer Systems (India) 8. SITEL (U.S.)

9. Tata Consultancy Services (India) 9. EDS (U.S.) 9. Teletech (U.S.)

10. WNS Global Services (India) 10. CSC (U.S.) 10. CustomerCorp. (U.S.)

Source: BusinessWeek, The Future of Outsourcing

5 Managerial Steps That Pay Off

1. Go Offshore for the right reasons• Shifting a broken process overseas may not fix it

2. Choose your model carefully• Could cost more• Get your people on board• Employees and middle managers can make the bold

move happen….or stop you in your tracks

5 Managerial Steps That Pay Off

4. Be prepared to invest time and effort • Often what is lacking in offshore partners is a lot of

deep process knowledge

5. Treat your partners as equals • Telling your partners exactly what to do and how to

do it is not conducive to the entire process

Examples• Penske and India’s Genpact

• http://www.businessweek.com/magazine/content/06_05/b3969414.htm

• Eli Lilly• http://www.centerwatch.com/news-online/article/987/eli-

lilly-expands-its-outsourcing-partnership-with-i3-statprobe

Sources• Gibson, Stan. “HP Goes DistanceFor P&G,” eWeek, 3/20/2006, Vol. 23

Issue 12, p49-52, 3p. • “A world of work,” The Economist, November 13, 2004, pp. 6-7. • Booton, Bob (2005). Outsourcing in a box. San Jose, CA: Bidness Books

Publishing.• Engardio, Pete, "The Future of Outsourcing," Business Week, January

30,2006. pp. 50-58.• Kripalani, Manjeet, "Five offshore practices that pay off," Business Week,

January 30, 2006. pp. 60-61.• http://economictimes.indiatimes.com/articleshow/1468167.cms• http://www.behtimes.com/article/123/7/• http://us.rediff.com/money/2004/jan/08bpo.htm• http://globalconnect.ucsd.edu/taipei/documents/Inter-

RegionalPartnershipsAnIndiaPerspective.pdf• http://www.cyfuture.com/business-process-outsourcing.htm• http://www.bpoindia.org/• http://www.xicom.biz/research.html• http://www.networkworld.com/news/2004/0407updatibm.html• http://encarta.msn.com/encyclopedia_701702628/Outsourcing.html