The Perils of Business Process Outsourcing - Essay Example

The Perils of Business Process Outsourcing The growing globalization ushered a new trend called business process outsourcing (BPO) where companies sub-contract or outsource their core and non-core operations. The most common BPOs are call-centers, human resources, accounting and payroll outsourcing. It is irrefutable that this new system has been viewed as highly beneficial for business organizations. In fact, the most reputed companies like Dell, IBM, and GM are now outsourcing their business process to BPO hubs like Philippines and India.

The major rationale for business process outsourcing is cost minimization. Business organizations are often attracted by the prospects of lowering operation and administrative costs by looking for low-wage workforce to take in their processes. Managers also argue that BPO is a "management tool" which "frees companies to build upon their core competencies by leaving the non-core stuff to providers" (Banham 1). However, the above presumptions about BPO are myopic as they fail to recognize the costs associated with leaving the companies' processes to lower paid third world workers.

First, as companies try to find less costly resources, the labor market in the home country usually suffers because of massive lay-off. It is also irrefutable that BPOs, like call centers, does more harm than advantage. Take Dell for instance which have always been regarded for its excellent customer service. This recognition for the company has been eroded due to the fact that India's customer agents often lack the knowledge and skill necessary to service customers (Dell Admits Indian Mistake).

For these reasons, I believe that business process outsourcing is more detrimental than beneficial. Companies planning to outsource should rethink and weigh both quantitative and qualitative aspects of BPO.Works CitedBanham, Russ. "Cut to the Core-Business Process Outsourcing-Statistical Data Included." CFO:Magazine for Senior Financial Executives. Oct. 2001. 09 August 2006 "Dell Admits Indian Mistake." CNET Networks. 2006. 09 August 2006