Documente Academic
Documente Profesional
Documente Cultură
Prepared by:
Name: Md. Ariful Islam
ID: 2015210004083
Name: Kazi Shahinur Rahman
ID: 2015210004082
Section: 3
Department: MBA
School of Business Studies
Southeast University
Prepared to:
Teacher Name: Rashedul Hasan
Designation: Lecturer
Department: MBA
School of Business Studies
Southeast University
Letter of Transmittal
January 19th, 2016
To
Rashedul Hasan
Lecturer
School of Business Studies
Southeast University
Subject: Submission of the report on Business process outsourcing.
Dear Sir.
Here is a report on Business process outsourcing. This assignment was assigned to me for
the purpose of fulfillment of MIS and Decision Making Techniques Course. I have tried to
collect the information to make my respect specific. Through the user of preparing this report
i have developed a clear understanding about MIS and Decision Making Techniques. I tried
my level best to make this report as reflective as possible. I appreciate to provide any
information or classification if necessary. Each aspect is considered and studied as required
and as per direction of this course instructor.
I would like to thank for assigning me such a responsibility and helping me on different
aspects of the assignment.
Sincerely,
Md. Ariful Islam - 2015210004083
Section: 3 Program: MBA (1 Year)
School of Business Studies
Southeast University
Acknowledgement:
First of all i would like to thank the Almighty for giving me the time, patience, energy and
will power to finish this assignment. Then i would like to thank my course lecturer Rashedul
Hasan for making us do this assignment. While doing this assignment my gained quite some
knowledge in this field. Next i also like to thank who bore the pain of finishing this
assignment. Last but not the least i would like to thank my family members who have
suffered my late night nuisance while finishing this assignment. Thank you all.
Executive Summary:
Business process outsourcing (BPO) is the buzzing word now-a-days;
means subcontracting of works to aired third party service provider. Its
becoming more & more popular day by day because it is offering less cost & high quality
service and many other operational, technological & financial benefits. And Information
Technology Outsourcing (ITO) is the most booming area of outsourcing which is precisely
three forth of the total outsourcing industry.
All the research organizations, specialists & futurists are sure about the fast forward move of
the Information Technology Outsourcing. Most of the fortune 1,000 companies are tending to
go for outsourcing. In developed world nearly half of all businesses use offshore providers,
and two-thirds plan to send work overseas in the near future. So, the future of this business is
very bright.
IT Outsourcing is very much advantageous as a small business than many other businesses.
Its easy to finance. It has advantage on tariff, transportation, infrastructure & location,
availability of workforce, HR hiring & training cost, and legal requirements. Besides, it gets
tax exemption, govt. incentives & stable government support. Moreover, it can use the
women workforce rapidly & has a high success rate. So, it is the perfect time for our
entrepreneurs to grab this business which costs little but earns a lot.
Contents
Letter of Transmittal....................................................................................................................i
Acknowledgement:....................................................................................................................ii
Executive Summary:.................................................................................................................iii
Chapter 1: Introduction..............................................................................................................1
1.1 Business Process Outsourcing:........................................................................................1
1.2 Objective:.........................................................................................................................3
1.3 Methodology:...................................................................................................................4
Chapter 2: Body of the Assignment...........................................................................................6
2.1 What is outsourcing?........................................................................................................6
2.2 Benefits of Outsourcing:..................................................................................................6
1. Get access to skilled expertise........................................................................................7
2. Focus on core activities..................................................................................................7
3. Better Risk Management................................................................................................7
4. Increasing in-house efficiency.......................................................................................7
5. Run your business 24X7................................................................................................8
6. Staffing Flexibility.........................................................................................................8
7. Improve service and delight the customer......................................................................8
8. Cut costs and save BIG..................................................................................................8
9. See an overall increase in your business........................................................................8
2.3 BPO is the process of hiring another company to handle business activities:.................9
2.4 BPO Service Examples:.................................................................................................11
1. Customer Support Services..........................................................................................11
2. Technical Support Services..........................................................................................11
3. Telemarketing Services................................................................................................11
4. Employee IT Help-desk Services.................................................................................12
5. Insurance Processing....................................................................................................12
6. Data Entry Services / Data Processing Services..........................................................13
7. Book Keeping and Accounting Services......................................................................13
8. Internet / Online / Web Research.................................................................................13
2.5 BPO Almost Everywhere:..............................................................................................14
1. BPO appears to be an all inclusive term that covers everything..................................14
2. BPO- Industry Segment:..............................................................................................14
2.6 Disadvantages of Outsourcing:......................................................................................14
1. Loss of Managerial Control..........................................................................................14
2. Hidden Costs................................................................................................................15
3. Threat to Security and Confidentiality.........................................................................15
4. Quality Problems..........................................................................................................15
5. Tied to the Financial Well-Being of another Company................................................15
6. Bad Publicity and Ill-Will............................................................................................15
2.7 Business Process Outsourcing in Bangladesh:...............................................................16
2.8 The Future of Outsourcing in Bangladesh:....................................................................17
1. Bangladesh role in the outsourcing industry................................................................18
2. Opportunities for the Bangladeshi Outsourcing Industry............................................19
3. Opportunities for Bangladesh in terms of outsourcing are:.........................................19
4. Bangladesh will face some new emerging challenges, such as:..................................20
2.9 Top ten Strategic Recommendations for Negotiating an Outsourcing Transaction:......21
1. State Your Expectations Clearly...................................................................................21
2. Get Negotiating Leverage as Early as Possible............................................................21
3. Nail down Your Performance Metrics Clearly Up Front.............................................22
4. Understand What Service Level Agreements (SLAs) Really Are................................22
5. Often Ignored Transition services: Entrance and Exit of a service provider...............22
6. Defining Services Precisely to Avoid Loopholes.........................................................22
7. Dont Ignore the Importance of Service Provider Personnel.......................................23
8. Give Due Attention to Relationship Management.......................................................23
9. Fees and Expenses Plug Up Back Door Expense Gouging......................................23
10. Termination of Relationship.......................................................................................23
2.10 SWOT Analysis for BPO:............................................................................................24
Chapter 3: Termination.............................................................................................................25
3.1 Conclusion:....................................................................................................................25
3.2 Bibliography.......................................................................................................................26
Chapter 1: Introduction
1.1 Business Process Outsourcing:
It is the delegation of one or more of IT intensive business processes to an external provider,
which in turn owns, manages, and administers the selected processes based on defined and
measurable performance criteria. (Saha, 2013)
Business Process Outsourcing (BPO) is defined as the delegation of one or more business
processes to an external provider who, in turn, owns administrate and manages the selected
processes based upon defined and measureable performance matrices.
BPO as per the work performed can be classified as VOICE BASED, which includes
customer related services such as technical support, marketing etc. and NON-VOICE, which
includes internal business operations. And as per the location involved it can be classified as:
ON-SHORE: BPO that is contracted inside a companys country.
NEAR-SHORE: BPO that is contracted to a companys neighboring country.
OFF-SHORE: BPO that is contracted outside a companys country.
The trend in outsourcing continues to grow both in the number and value of outsourcing
transactions and in the variety of services which are outsourced.
The pressures which lead organizations to outsource show no signs of slackening and cost
savings remains a major incentive. However, other factors are increasingly influencing the
decision to outsource access to innovation, increased speed to market, and service quality
are proving equally as important as cost savings.
As the value of transactions has increased, so too has the range of outsourced services. Most
non-core services which organizations have traditionally provided internally IT, finance and
accounting, HR and property management - are now commonly outsourced. The locations
from which services are provided have also changed the attraction in outsourcing to
offshore locations such as India has soared.
Reports show that the fastest growing sectors are business process outsourcing and business
process management. For many large IT suppliers outsourcing and process management are
one of the few areas to have flourished in the difficult market of recent years. (Saha, 2013)
1.2 Objective:
Business process outsourcing (BPO) is the act of assigning part of a business process to a
third party on a repeated basis. It differs yet is similar from Proper Employment and Outtasking.
The outsourcing process has the aspect of employing a third party to perform an assigned task
without the liabilities from "labor laws." This third party may be within the same country as
you or be from a country a thousand or tens of thousand miles away from you. With this, you
can easily terminate your relationship with such party without immediate legal precautions
from the "labor laws" if they fail to meet your standards. If they meet your standards or if you
are satisfied with their performance, you can again engage a contract with them to do another
assigned task, preferably of similar nature.
The outsourcing process enables to enjoy having a reliable "regular employee" without the
hassle of answering to the boundaries and rules set by the "labor laws." You can continuously
assign tasks to this third party and expect results from them as you would be expecting from
one of your regular employees. However, if you feel that they are not able to perform such
assigned tasks and meet your standards, you can easily terminate your relationship with them.
Outsourcing therefore has two primary objectives:
To get better results for the same or slightly higher cost.
To get labor at reduced cost but get the same or slightly better results.
1.3 Methodology:
Business process outsourcing methodology is very structured and helps us to arrive at the
optimal solution for our clients. It is a loose collection of business process models. These
process models can either be applied to entire project or any one phase of the project. The
major advantage of our BPO process models is easy to understand as well as apply and
maintain. It is very flexible as it can be adapted for an IT project as well as other business
processes. It provides a focused and common language for both customers and suppliers.
Our transition management support model has been tested and updated with the required
formats, tools and guidelines so that the risks involved in customer process transition is
reduced as much as possible. The project management system is well coordinated and
documented so that all critical client information is incorporated to assist the transition team
in all important business processes.
Broadly speaking, there are four main steps involved in our BPO methodology. They are:
ASSESSMENT- Our team of experts analyzes the business process that is outsourced to
us. We identify the exact processes that are outsourced, calculate the risks for these
projects and develop the business process for the client.
TRANSITION- This again consists of several steps. The first and foremost is knowledge
transfer. Here operating procedures, documents and in some cases executives are prepared
for process execution. The next step is technology transfer. This tests if the existing
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infrastructure is adequate for the project and adds any new ones that are required for the
project. Finally in order to start operations, process executives are recruited or trained as
need be.
PARALLEL RUN- Here the successful migration of the business process to offshore
location is tested. While doing this however, care should be taken that no interdependent
process is disturbed.
STEADY STATE OPERATIONS- This is the part where the flow of BPO services is
maintained without interruption. The second aspect of this step is to update the business
process outsourcing services as per and in collaboration with client requirements.
(BPO-methodology)
Outsourcing, in its early days, seemed possible only by larger companies which farmed out
many low-end business processes. Since then, outsourcing has become more of a norm than
an option. Apart from the cost savings, outsourcing is seen as a strategic move that can allow
businesses to gain a competitive advantage.
It certainly has opened up opportunities for organizations to utilize skill sets and expertise
that they normally would not be able to access without large investments. It has also become
a savior to startups and small businesses which have to work with modest capital.
At the lower end of the spectrum, outsourcing back-end jobs such as data entry/ processing,
customer support, payroll processing etc. have helped organizations save a staggering amount
of money. Now, there are service providers across the globe who specialize in simple backoffice services to high-end services like manufacturing design and legal outsourcing, to name
a few.
1. Get access to skilled expertise
One of the primary reasons why a business may want to outsource a task is when it requires
skilled expertise. This skill set may not be a core competency of its business. To allow you to
focus on your core mission in providing a high quality product and service to your customer
what makes sense is off shoring the task to people can perform it better. Moreover, as a
double whammy, you not only spend less on employee trainings and save precious man-hours
but cut costs as well. Outsource has dedicated teams to provide wide range of outsourcing
services, which help us offer specialized business process outsourcing solutions to clients
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globally. We leverage on our multi-domain expertise and skills across variegated industry
verticals and technologies to achieve superior quality and unmatched proficiency in the
outsourced process.
2. Focus on core activities
Workload increases with additional non-core functions and the quality of your core activities
suffers as your business grows. Outsourcing in such scenario to a third party plays an
important role by allowing your key resources to focus on primary business tasks.
3. Better Risk Management
Outsourcing will allow you to share any associated risks with your outsourcing partners there
by reducing your burden. For example - by outsourcing to a competent outsourcing partner
you reduce the risk involved in having the same task done in-house by staff that may not be
as competent in that field.
4. Increasing in-house efficiency
After you allocate tasks to your outsourcing partner, they share the workload of your
employees. This allows you to develop your internal task force and use them more efficiently.
services your customers will be delighted! Outsourcing can help you benefit from increased
customer satisfaction and thus creating a stream of loyal customers.
8. Cut costs and save BIG
All the benefits listed above come with the bonus benefit of lower cost and big savings!
When you outsource services like medical billing, call center and teleradiology, etc. to a lowcost country like India or Philippines, you are getting access to quality services that are
offered at a much lower cost (You can save up to 60% costs)! Read our well researched
article on - Preferred Outsourcing Destination - India or Philippines, to know how India fares
in comparison to Philippines.
9. See an overall increase in your business
Outsourcing shows an increase in your productivity, customer loyalty. level of quality,
business value, profits, and much more. (The Benefits of Outsourcing)
2.3 BPO is the process of hiring another company to handle business activities:
Business process outsourcing (BPO) is a subset of outsourcing that involves the contracting
of the operations and responsibilities of specific business functions (or processes) such as
payroll, customer service, accounting, data recording and much more to a third-party service
provider. (kumawat)
Our talented team provides 24* 7 supports across industries and geographic locations.
BPO factors like economy of scale, business rick mitigation and cost advantage our BPO
services standouts on all these factors. Our strength lies in our people who are talented, smart
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and multi-lingual & goal oriented who works with extreme dedication and passion under
extreme pressure conditions. Our Subject Matter Experts creates right solution for you and
helps you in find smarter solutions for better operations.
We provide end to end solutions for our clients in the areas across various industries:
Insurance
Health Care
Manufacturing
Telecom
Construction
Technical Support
High Tech
Financial Services
Analytics Services
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3. Telemarketing Services
Outbound calling to sell wireless services for a telecom provider.
Outbound calling to retail households to sell leisure holidays.
Outbound calling to existing customers to sell a new rate card for a mobile service
provider.
Outbound calling to sell credit or debit cards etc.
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5. Insurance Processing
New Business / Promotion: Inbound/outbound sales, Initial Setup, Case
Management, Underwriting, Risk assessment, Policy issuance etc.
Policy Maintenance / Management: Record Changes like Name, Beneficiary,
Nominee, Address; Collateral verification, Surrender Audits Accounts Receivable,
Accounting, Claim Overpayment, and Customer care service via voice/email etc.
General Ledger
Accounts Receivables and Accounts Payable
Financial Statements
Bank Reconciliation
Assets / Equipment Ledgers etc.
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Medical transcription
Animation
Power point presentations
Equity research
Contract research
Call centres
Collections
IT Help desk
Internet chat
Customer service
Transaction processing
Travel bookings
Accounting
etc. etc. etc. (kumawat)
Banks
Insurance
Asset management
Manufacturing
Healthcare and Pharma
IT
Telecom
Travel agencies
Airlines
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Governments
2.6 Disadvantages of Outsourcing:
1. Loss of Managerial Control
Whether you sign a contract to have another company perform the function of an entire
department or single task, you are turning the management and control of that function over
to another company. True, you will have a contract, but the managerial control will belong to
another company. Your outsourcing company will not be driven by the same standards and
mission that drives your company. They will be driven to make a profit from the services that
they are providing to you and other businesses like yours.
2. Hidden Costs
You will sign a contract with the outsourcing company that will cover the details of the
service that they will be providing. Anything not covered in the contract will be the basis for
you to pay additional charges. Additionally, you will experience legal fees to retain a lawyer
to review the contacts you will sign. Remember, this is the outsourcing company's business.
They have done this before and they are the ones that write the contract. Therefore, you will
be at a disadvantage when negotiations start.
3. Threat to Security and Confidentiality
The life-blood of any business is the information that keeps it running. If you have payroll,
medical records or any other confidential information that will be transmitted to the
outsourcing company, there is a risk that the confidentiality may be compromised. If the
outsourced function involves sharing proprietary company data or knowledge (e.g. product
drawings, formulas, etc.), this must be taken into account. Evaluate the outsourcing company
carefully to make sure your data is protected and the contract has a penalty clause if an
incident occurs.
4. Quality Problems
The outsourcing company will be motivated by profit. Since the contract will fix the price,
the only way for them to increase profit will be to decrease expenses. As long as they meet
the conditions of the contract, you will pay. In addition, you will lose the ability to rapidly
respond to changes in the business environment. The contract will be very specific and you
will pay extra for changes.
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structures will be stabilized to some extent. Many small alliances, focused on increased
operational efficiencies, better quality control and reduced back-office costs, are being set up.
This trend is going to continue.
Shared and common services were always considered a threat to outsourcing, but the trend is
changing. Sharing critical business and IT services has been proven to cut costs, reduce errors
and improve productivity. Industry experts predict that Latin America and Europe will be the
new outsourcing destinations in the near future. Brazil and Russia will make their presence
felt in the global outsourcing market and China will continue to move ahead. The rising price
of oil will put pressure on companies to take advantage of technology and outsource work to
remain profitable.
According to industry experts, consumption-based technologies that are delivered through the
cloud will grow, as they are cost effective. Some analysts predict that European carmakers
will start outsourcing their business. This would result in cars being developed by other
companies while being sold under their brand names. Big pharmaceutical companies will
launch new drugs in the market at a fraction of the current cost by partnering with India,
China, and Russia in molecular research and clinical testing so Bangladesh could be the next
here.
their own persona development in the IT sector for improvement of their lifestyles vis--vis
the nation. with its large population and multiple-skilled people, Bangladesh would continue
to be preferred for both back-end and front-end outsourcing.
emerging while existing providers are expanding into new markets. Bangladesh has made
remarkable achievements and has built a strong reputation in the outsourcing industry.
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service provider and the client are to perform. A detailed transition plan may be appropriate.
You might want to ask that the timeframe for the transition schedule be extended for a certain
period of time (e.g. 45 additional days) without incurring additional charges from service
provider.
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W = Weakness
Cultural differences
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O = Opportunities
Horizontal and vertical expansion of existing customer base into new markets
T = Threats
Political instability
Bangladesh's competitors in Eastern Europe, Latin America and the Asia. (kumawat)
Chapter 3: Termination
3.1 Conclusion:
In conclusion, outsourcing is a business strategy used by companies, for reasons such as the
lack of expertise, through the subcontracting of their business functions to outside
organizations. Outsourcing is receiving much response from companies all around the world
these days, with 70% of European companies already using it for reason such as to seek cash
infusion, reduce risk and operating costs, etc.
Companies that offer services at low prices can be easily found. However, due to several
ethical concerns, some companies prefer the costlier route as the price difference could be
deceptive because the variation will only be in the initial cost. Compromise of customer data
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and vendor reliability are one of the main ethical concerns companies tend to face, especially
in offshore outsourcing contracts.
Outsourcing is not the right tool for ever job but it is a good tool for the right job. There are a
couple of typical and traditional problems faced in outsourcing. Poor planning and less-thanexpected results are some of the problems faced by outsourcing players. There are solutions
to these problems however, there is no silver bullet and some situations can never be
predicted.
All in all, the future of outsourcing appears to be fairly bright and positive. The information
technology era enables new outsourcing players to take advantage of the different stages of
an organization's value chain. Besides that, there are also clear signs indicating the
broadening confidence in the outsourcing industry, which would ultimately lead to more
companies adopting the business strategy over an increasingly wide range of business
processes and functions.
3.2 Bibliography
(n.d.). Retrieved 12 16, 2015, from https://www.google.com.bd/url?
sa=t&rct=j&q=&esrc=s&source=web&cd=11&cad=rja&uact=8&ved=0ahUKEwj1vrO5wuD
JAhVBS44KHaIxAz4QFghMMAo&url=http%3A%2F%2Fwww.moit.gov.il%2FNR
%2Frdonlyres%2FE815C598-364E-40A8-B1AED76FE5BA7C76%2F0%2FExecutiveSummary.doc&usg=AFQjCNE
(Sohel), S. A. (2013, 7 19). soheljnr. Retrieved 12 18, 2015, from soheljnr.webs.com:
http://soheljnr.webs.com/apps/blog/show/30631613-the-future-of-outsourcing-in-bangladeshAlexander P. Woollcott, E. (n.d.). MMM Tech Law & Business Report. Retrieved 12 18, 2015,
from www.mmmtechlaw.com: http://www.mmmtechlaw.com/top-ten-strategicrecommendations-for-negotiating-an-outsourcing-transaction/
BPO-methodology. (n.d.). Retrieved 12 16, 2015, from www.searchenginegenie.com:
https://www.searchenginegenie.com/bpo-methodology.htm
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