Bpo Midterm

Outsourcing – is an arrangement in which one company provides services that could also be provided in-house by the
company.
Outsourcing – a trend that is becoming more common among local and global industries of today.
Reasons why companies outsource
1. Capacity management
2. Lower cost
3. Better performance
4. Swiftness and expertise
5. Risk-sharing
6. Reduced operational and recruitment costs
Capacity Management – management of the organization’s capacity limit whereby resources are increased or decreased
in step with rising or falling demand. Example is DEMAND CHASING.
Lower Cost – the uses foreign companies with lower wages to produce resources
Better Performance – allows the firm to concentrate its resources in its core competencies
Swiftness and Expertise – task are outsourced to vendors what specialized in their field
Risk-sharing – since the outsourced vendor is a specialist, they plan your risk-mitigating factors better
Reduced Operational and Recruitment cost – outsourcing eludes the need to hire individuals in-house
Commonly outsourced streams of business
 It outsourcing
 Content development
 Recruitment
 Manufacturing
 Legal services
 Web design and maintenance
 Logistics
 Technical/customer support
What functions/activities are outsourced
Non-core functions/activities – service aspects that are not necessarily required by a firm in fulfilling its value proposition
to its customers.
Advantages of outsourcing to the employer
 Freeing up management from delaing with myriad and complex employment issues
 Leaving management more time to concentrate on what they do best
 Provides management with an integrated and cost-effective approach to human resource management and
administration
 Enables management to give big-business benefits to employees due to economies of scale
Advantages of outsourcing to employees
 Working abroad, living here

 Higher pay and no discrimination
 Full insurance coverage including dental and health benefits
 High over-time pay
 Generally, no dress code
 Prestige
Disadvantages of outsourcing to employees
 Shifting schedule- the graveyard shift

 Dealing with irate customers
Four types of outsourcing (module)
1. Professional outsourcing
2. Manufacturing outsourcing
3. Process-specific
4. Operational
Professional outsourcing – accounting, legal, purchasing, information technology support and other specialized services
Manufacturing outsourcing – industry-specific
Process Specific outsourcing – different parts or components manufactures by other companies
Operational outsourcing – services that specialized in specific activities like cleaning, landscaping, facilities maintenance
and property management
Outsourcing as a business strategy – it improves efficiency, cut costs, speeds up product development and allows
companies to focus on their “core competencies”
Non-core activities – are items that are considered outside of normal activities or operations
Core-activities – are items considered central to operations
Readiness Assessment
 Evaluates the institution’s overall readiness to begin a project

 Identifies areas needing more attention
 Makes recommendations that increase project success
 Sets up the project for success by identifying key areas of potential failure
IT has become central to the provision of outsourced business processes
 IT’s growing role in the BPO

 Adding greater value
 Transforming processes
 CIOs are change agents
IT trends are shaking up the business sector, putting CIOs at the forefront of planning
IT’s growing role in the BPO – technologies such as cloud computing, business analytics software, social media
platforms and process automation software are being used within BPO to enable businesses to lower and be more
effective.
Adding greater value – through additional technology-based services, customers will get more for their money, while
supplier business models will change, with less reliance on providing human resources.
Transforming Process – BPO today is about mining the huge volume of transactional data that is being processed.
BPO providers a d their clients today are using the provider’s industry expertise and insight, analytics and innovation
to help a client tap into that information to operate its business better and drive business outcomes.
CIOs as change agents – the CIO plays a key role in helping the role of IT to a business enabler and source of
competitive advantage. The CIO’s role will increasingly deal with information rather than technology.
Types of Outsourcing
1. Professional
2. Manufacturing
3. Industry Specific
4. Operational
5. It outsourcing
6. Web development
7. Multi-sourcing
8. Market research
9. Marketing
10. Content creation
11. Near shoring
12. Off shoring
13. Human resource
Advantages of professional task on demand specialized services
1. Significantly cut cost

2. Cut down overhead cost
3. Has the access to the talent on a global scale
Disadvantage
1. No such thing as confidentiality

2. Possibility of worker losses
Benefits of process specific outsourcing
1. Cost-saving
 Increase efficiency of worker
2. Access to skills and specialized HR
3. Flexibility
Commissioning service provider (SPECIALIZATION)
KPO – Knowledge process outsourcing
LPO – legal process outsourcing
RPO – recruitment process outsourcing
Concerns of the client company
1. Will the client be reliable?

2. Will the quality of products and services provided by the vendor meet our expectations?
3. Will I be made aware of the total life-cycle cost of the service?
4. Will the vendor keep my confidential data safe?
5. Will the vendor deliver as per the specified deadlines?
6. Will the vendor’s problems with employee attrition affect me?
7. Will I be liable to face unknown risk by outsourcing?
8. Will the vendor be transparent and deal fairly in your financial dealings?
9. Will the offshore vendor comply with our statutory laws and regulations?
10. Will the vendor’s culture match that of my organization?
Concerns of the service provider
1. Scope of the work

 Details when the services are required
 Defines the services or tasks and the conditions for payment and dispute settlements
 Foundation of the contract
 Gives clear directions to the service provider before the work begins
2. Performance Metrics – it is a continuous process that identify and eliminate inefficiencies ay an early stage. What
to measure?
 Vendor capability
- The quality of the service delivered
- Cost of services
- Vendor responsiveness
- Service level agreement (SLA) compliance
- Infrastructure capability
- Technological advancement
- Staff expertise
- Exception handling ability
- Process output enhancement
3. Benchmarks to ensure work quality
- Financial (total cost of ownership (TCO))
- Operational efficiency/service quality (quality, time, customer/user satisfaction, operational
expertise and adaptability, creative solutions, and security of tasks and documentation.)
- Relationship (communication, collaboration)
- Strategy (meeting outsourcing objectives and benefits and competitive advantage)
- Growth (training and improvement in employee efficiency)

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Outsourcing – is an arrangement in which one company provides services that could also be provided in-house by the

Reasons why companies outsource

Commonly outsourced streams of business

What functions/activities are outsourced

Advantages of outsourcing to the employer

 Working abroad, living here

Disadvantages of outsourcing to employees

 Shifting schedule- the graveyard shift

Four types of outsourcing (module)

Manufacturing outsourcing – industry-specific

Process Specific outsourcing – different parts or components manufactures by other companies

Core-activities – are items considered central to operations

 Evaluates the institution’s overall readiness to begin a project

IT has become central to the provision of outsourced business processes

 IT’s growing role in the BPO

Advantages of professional task on demand specialized services

1. Significantly cut cost

1. No such thing as confidentiality

Benefits of process specific outsourcing

Commissioning service provider (SPECIALIZATION)

KPO – Knowledge process outsourcing

LPO – legal process outsourcing

RPO – recruitment process outsourcing

Concerns of the client company

1. Will the client be reliable?

Concerns of the service provider

1. Scope of the work

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