Business Process Outsourcing Models Analysis - Report Example

BUSINESS PROCESS OUTSOURCING (BPO) MODELS ANALYSIS BUSINESS PROCESS OUTSOURCING (BPO) The process in which a few of the business operations are outsourced to the third party so that efficiency can be acquired and cost can be minimized is called Business Process Outsourcing. Earlier this process was used only by the manufacturing companies but with the advancement and reduction of global barriers, businesses have started outsourcing service related operations as well. BPO is a solution for all the economic and business related problems. Using BPO organisations seek to maximize their efficiency and acquire the competitive edge which is required for sustaining in the industry (Accenture, 2009). 1.1. General Description And Statistics 1.1.1. Introduction In this globalized business era, organisations emphasize on accomplishing the basic operational objectives which includes minimizing the cost and increasing the efficiency. With this, the internal operations are outsourced to external organisations which specialize in running those particular operations (KPMG, 2012). In the BPO industry, five countries specialize in performing these operations. These are India, China, Mexico, United States and Philippines. All the mentioned countries have a complex economic structure but since they have acquired the expertise in providing BPO services the charge is minimal (Duening & Click, 2005). These services by the countries increase the employments and at the same time it initiates innovation in the socio connectivity process. Earlier the scope of BPO was only limited to the IT industry, but with globalization and increasing competition this ideology has been accepted in several different industries (Duening & Click, 2005). Application of this method is becoming significant for the business for sustaining competition within the industry and maximizing the outcomes. In this report, a discussion on BPO will be given based on which the significance and future growth prospects of the BPO business can be discussed. Some of the drivers of the BPO business which are revolutionizing the idea and making it more and more popular in the industry are the use of the broadband internet, business specialization, educational attainment, internet security, online analytic processing and inexpensive data storage. These main drivers make outsourcing different tasks achievable for the business. This is a revolutionizing idea used for making the business efficient so that all the goals and targets of the business can be acquired (Duening & Click, 2005). (Duening & Click, 2005) The BPO industry is classified into three major types which are offshore, near shore and onshore operations. The major contributing countries of the industry and the functional areas in which they operate are shown below. (Duening & Click, 2005) On the basis of this discussion, the future prospects and the industry growth objectives are evaluated. With the evaluation of the relevant models a comparison can be formed using which the scope of the business can be evaluated. 1.1.2. Statistics The statistics and development of the BPO industry which is estimated by the year 2015 has been shown in the graph below. Most of the businesses are going towards the adaptation of BPO for outsourcing the operations in which they do not have the required expertise (Duening & Click, 2005). Development in different phases of the industry can be seen in the graph below. (Duening & Click, 2005) An example of the IT industry has been shown below in which the functions have been outsourced. The graph below shows that outsourcing a few operations standardizes the cost for the organisation. Some of the operations and the cost applied on them change with the varying situations of the economy hence to save the cost it is essential that those functions are outsourced. This has increased the popularity of the BPO business. (ATUM, 2014) 1.2. BPO Models Business Process Outsourcing models are used for easing the operations of the organisation. The operations are managed and through this global acquisition of the process can be acquired. Organisations outsource to become more competitive with the aim to reduce the operating cost. Moreover, businesses outsource activities that other companies or individuals can perform at a lower cost or with a better quality. Important expenses of the business are also controlled through the use of this model (Cerida, n.d). Through this practice, the focus of the companies is aligned to the goals which the strategic managers seek to acquire. Outsourcing boosts the efficiency and the clients have access to the world class technology and efficiency which is required for performing the job (Cerida, n.d.). The risk associated with the process is shared by both the parties and the resources required for manufacturing are made available by the party to which the function is assigned. This is convenient for making the end product available (Flat World Solutions, 2014). 1.2.1. Model 1 The model shown below is of Mach Rotech which assists in performing the core and non-core processes. The non-core processes such as data processing, administrative operations and contact centers are provided by this firm to the clients. This increases the market strength and reduces the cost so that state of the art technology can be acquired (MachroTech, 2009). (MachroTech, 2009) Other associated benefits are the improved operational excellence, branding customer relationship and enhanced organisation responsiveness. The application of the model shows the relevant significance. This enables proposed benefits for the organisation (MachroTech, 2009). Example of this model is several manufacturing companies which outsource their manufacturing operations to companies established in China and other regions so that efficiency can be acquired. 1.2.2. Model 2 Organisations that are initiating a new process require that their operations are outsourced. Through this practice, different models are applied. This shows the expertise through which the expertise is depicted. Appropriate planning and knowledge sharing are essential for the completion of the project. (2nABLE, 2008) Application of the model is effective, if the communication barriers are less and all the processes which are included are monitored appropriately. This includes application of the six sigma method which can be used effectively. All the processes which the firm performs are connected as a chain the development of which is acquired through planned escalation (2nABLE, 2008). 1.2.3. Model 3 Trans cosmos which is a global outsourcing company operating in the American industry promotes its outsourcing services on the basis of the following. The company provides services for all the non-critical processes of the business through which the Engineering Solution Services, Business Processes Outsourcing Services and IT Outsourcing Services of other organisations are managed. This is because the other firms do not have the relevant expertise in these areas which require that such operations are outsourced (Transcosmos America, Inc, n.d.). (Transcosmos America, Inc, n.d.) These practical cases show the importance of BPO. The popularity and the need of this system have enhanced which ensures that all the function of the business is utilized with entire efficiency. 1.2.4. Model 4 ACS is an outsourcing company which has collaborated with Xerox Corporation so that all the BPO and IT related needs of the company can be catered. With this the services are provided across various different industries of the private and public sector. The main function which ACS caters for Xerox includes providing services related to managing finance, accounting and HR related transaction processes. In this competitive business environment the organisations outsource the functions in which they do not have relevant expertise. This enhances the efficiency and saves the cost (NTT Data, 2014). (NTT Data, 2014) The services of a BPO provider NTT Data can be evaluated from its business model. The company is working to enhance the service delivery, business agility, provides scope of rapid development, and has strategies to fund the businesses and provide a sustainable competitive advantage to the users (NTT Data, 2014). 1.2.5. Model 5 The model shows the appropriate application of horizontal and vertical BPO. In some of the cases, the organisations save the time by assigning the tasks to the organisations which are good at performing the tasks. With this the tasks such as payments and recruiting the staff is done by the organisations. Different organisations outsource the functions in which they lag. (Koeppel, 2013) Using this, organisations can save the cost and acquire their technological innovations imposing which can be very costly. 1.2.6. Comparisons BPO is used widely across the globe and the organisations prefer outsourcing the functions in which they do not have the expertise so that the related operations can be performed with entire efficiency. Application of BPO can be done in many different segments. At first, it was considered to be used in the IT industry only but later as outsourcing enhanced various functions was allotted to different organisations with the relevant expertise. Application of these models and its association in different cases show the significance of application of the model. Some companies have specialized in recruiting and some in IT. Some organisations are good at manufacturing at a large scale hence the client’s organisations seek the relevant expertise and aim at maximizing the returns and performing the tasks with complete efficiency. The market size of the BPO industry is expanding day by day as the global barriers are reducing. The statistics for the year 2013 show that the total service industry has a size of $304 billion. The vertical service industry holds a worth of $185 billion and the horizontal industry holds a net worth of $119 billion(Koeppel, 2013). (Koeppel, 2013) The BPO process is being used by the organisation excessively as the organisations look forward towards specialization. With this the businesses seek maximizing the efficiency and reducing the cost maximum they can. Businesses these days outsource the business functions and ensure that value based products are made available at the right time. The use of BPO is done mostly to support the business operations such as customer services, payments collections or delivery of the products which are secondary function for the main business but at the same time there are firms which specialize with these services. The analysis of different models in this report explains the role of the organisations and how other companies use their services. References 2nABLE. (2008). Engagement Model. Available from http://www.2nable.com/engagement_model.html [Accessed 21st February, 2014] Accenture. (2009). Achieving high performance through business process outsourcing. Available from http://www.accenture.com/SiteCollectionDocuments/PDF/Accenture-PC-BPO-Capabilities-Brochure-Final-Life-Insurance.pdf [Accessed 21st February, 2014] ATUM. (2014). Why Outsource IT?. Available from http://www.atum.com/it-solutions/why-outsource-it/ [Accessed 21st February, 2014] Cerida. (n.d.). Why use Outsourcing: -- A summary. Available from http://www.cerida.com/up_files/why_outsourcing.pdf [Accessed 21st February, 2014] Duening, T. N., & Click, R. L. (2005). Essentials of business process outsourcing (Vol. 34). John Wiley & Sons. Flat World Solutions. (2014). The Top 10 Reasons To Outsource. Available from http://www.flatworldsolutions.com/articles/top-ten-reasons-to-outsource.php [Accessed 21st February, 2014] Koeppel, H. (2013). Evolving BPM and BPO practices will change the nature of work. Tech Target, Available from http://searchcio.techtarget.com/opinion/Evolving-BPM-and-BPO-practices-will-change-the-nature-of-work [Accessed 21st February, 2014] KPMG. (2012). Hub and Spoke operating model. Available from http://www.kpmg.com/IN/en/IssuesAndInsights/ThoughtLeadership/Hub-and-spoke-model.pdf [Accessed 21st February, 2014] MachroTech. (2009). Business Process Outsourcing Model. Available from http://www.machrotech.com/services/business_process_outsourcing_model.asp [Accessed 21st February, 2014] NTT Data. (2014). Business Process Outsourcing. Available from http://americas.nttdata.com/Services/Services/Business-Process-Outsourcing/Business-Process-Outsourcing.aspx [Accessed 21st February, 2014] Transcosmos America, Inc. (n.d.). Business Process Outsourcing Services. Available from http://www.transcosmos.net/bpo/service.html [Accessed 21st February, 2014] Read More