1.

INTRODUCTION

1.1 Definition

Business outsourcing is practice of having certain job functions outside

company instead of having in-house department or employee.

Business outsourcing is also known as business process outsourcing and

abbreviated as BPO .

1.2 Classification of BPO

1.2.1 Horizontal BPO

This is about outsourcing centering upon functions. Here, a vendor

will specialize upon particular functions that he will carry out across
different industry domains. Procurement, HR, payroll processing and
facilities management — all come under this type. The subtype that
comprises all these is Automatic Data Processing or ADP. Even
benefit administration and tax solutions come under this.

1.2.2 Vertical BPO

As the above mentioned markets mature, the focus should turn on

providing vertical services, which will prove multiple functional
services within a limited number of industry domains. This includes
healthcare and financial services; manufacturing, retail, business
services, utilities and energy.

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1.3 Insourcing v/s Outsourcing
Outsourcing and insourcing are methods of dispersing work among
different departments or companies for strategic reasons.Insourcing is
typically done solely from within a company's own operational
infrastructure,while outsourcing uses companies not affiliated with the
outsourcing company to perform a task.There are cost and resource
differences between outsourcing and insourcing that influence a
company's management decisions.
1.3.1 Cost
A significant difference between outsourcing and insourcing is the cost to
the company.Insourcing is generally more expensive to a company
because new work processes must be developed to start the new division
of the company;outsourcing uses an outside company that already has a
workflow developed and employees familiar with the process.
For instance, if a car manufacturer wants to start making car computers
through insourcing instead of using outsourced technology companies,the
car manufacturer must create an assembly line for the computers, buy
equipment, train manufacturing employees and hire computer developers.
1.3.2 Resources
Companies that use outsourcing do not use their own resources for
manufacturing products or providing services.Insourcing uses resources
already owned by the company to achieve a goal.
For instance, a company might insource customer phone support for a
new product because it already has phone support for another product at
the company.The company would use existing employees to set up the
new call center under a division of the company.If the company
outsources its customer phone support, it uses the phone bank of the other
company.

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1.3.3 Control
A company's control over its operations differs if it uses outsourcing or
insourcing.Companies that outsource a manufacturing process or a
service often have little to no managerial control over the way in which
the outside company operates.For instance, a company known for its
friendly customer service cannot typically enforce its way of doing
business on an outside customer support center.Companies that insource a
manufacturing process or a service have complete control over its
operations and employees.
1.3.4 Location
The location of company operations is usually different between
outsourcing and insourcing.Insourcing typically involves placing the new
operation on site at the company or somewhere in the immediate
vicinity.Outsourcing usually involves using an outside company that is
not near the main company's operations.Outsourcing does not necessarily
mean that the outside company is in another country.Companies can
outsource work to other firms in the same country.If a company
outsources work to a firm in another country, it is usually called off-
shoring.

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 2. METHODOLOGY
The Information had been collected from various articles,websites and
data that were originally collected for other research purposes.

A short survey questionnaire was conducted to find their opinions about

Business Outsourcing .

The result of the survey was achieved by conducting an online survey

using google forms. Response from the respondents was recorded and
analyzed.

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 3. COMMON SERVICES OFFERED IN
BUSINESS OUTSOURCING

The most common services offered in BPO are :

3.1 Transcription services

This caters to the requirements of medical, legal and business firms.

Trained professionals transcribe the dictations provided and it requires
exceptional efficiency to provide error-free transcripts within strict
deadlines.

3.2 Website design/SEO

There are professional BPO companies that offer systematic website

design and SEO services for bigger companies dealing in healthcare,
medical and legal sectors. The services must cover every phases of web
designing and search engine optimization procedures. This is extremely
beneficial for the outsourcing companies when they want to build and
maintain easily navigable, search engine
friendly websites to attract more clients.

3.3 Medical billing and coding

Medical bills and claims with coding errors can lead to denial of claims,
thus affecting cash flow of medical facilities adversely. A reliable and
efficient outsourcing firm can help submit accurate medical billing and
claims data while maintaining deadlines, providing customers maximum
reimbursement ,benefits and thus increasing the medical firms’
reputation. From claim processing to submission and following-up, these
BPO firms manage all the tasks right and with remarkable efficiency.

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3.4 Data entry services

Managing huge volumes of data on a regular basis is essential for any

large firm, which brought the data entry services into existence.
Completing documentation procedures correctly on time is something
they specialize in; it helps the larger firms to maintain and streamline
their data with zero trouble. It helps them to focus on core competencies
and improve overall business efficiency. The data usually relates to
claims and forms processing, book and image conversions, surveys and
document conversion.

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 4. LEGAL ISSUES IN BUSINESS
OUTSOURCING
With the rise in outsourcing and with more and more global organizations
outsourcing business processes and IT services to India, there has been a
number of legal issues in outsourcing. Companies outsourcing to India
have to face some complex legal issues with outsourcing. If your
organization is outsourcing to India, make sure that your organization is
aware of the intellectual property protection and the data privacy and
protection in India. Before outsourcing to India, also make sure that your
organization knows about compliance with applicable Indian laws,
enforcing contractual/legal rights in India and dispute resolution
procedures.

There are several legal issues in offshore outsourcing and dealing with
them effectively can help the organization who wishes to outsource and
the outsourcing service provider, to face the legal issues of outsourcing.
The following are some tips on efficiently dealing with the legal issues of
offshore outsourcing.

4.1 Taxation

Offshore outsourcing is often influenced by several international and

local issues.The taxation policy of India also has a big effect on the
offshore outsourcing decision.Before outsourcing, find out about the tax
implications that you have to deal with.This is an important legal aspect
to deal with, because different countries have different tax laws.You can
meet your outsourcing provider in India and decide about which tax
provision would be appropriate in the legal contract.

4.2 Legal systems are heterogeneous

When you outsource to India or any other country, you will discover that
the rules of governance are different in different countries.
In outsourcing, you and your outsourcing provider have to make sure to
include two different legal systems.This heterogeneity in the legal system
is an important legal issue with outsourcing that companies have to deal
with.This problem exists, because there is no legal system which can be
used globally.Different countries even have different intellectual property
laws.

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Since there are no standard legal rules and regulations to follow, it is best
to meet your outsourcing provider and make sure that you adhere to both
the legal systems. This will help you to sort out any legal issues of
outsourcing.

4.3 The influence of local laws

Some countries have strict data protection and privacy laws, which might
be a hindrance in outsourcing.In such cases, the outsourcing provider and
the customer would be legally bound and share equal legal
responsibilities.This might increase the liability of the customer and in
some cases can become a legal issue in outsourcing.Outsourcing service
providers also have to protect their business from civil penalties.Conduct
some research on the country that you want to outsource to and if the
local laws of that country are a hindrance, find another outsourcing
service provider. The influence of local laws is another major legal issue
in outsourcing.

4.4 Dispute settlement

Dispute settlement is yet another legal issue with outsourcing.If a

customer from U.S wants to sue an outsourcing provider in China, there
would be plenty of disputes.The Chinese outsourcing provider would not
want to go to the U.S and the U.S customer would not want to come to
China.There is also the legal issue of where the case will be filed, as the
case has to be fought in the country where the case is filed.These two
countries would also have two different legal systems.When making a
settlement contract with your outsourcing provider, ensure that you
mention the system of dispute settlement.Clarifying the legal aspects in
outsourcing and dealing with the problem of dispute settlement can avoid
future problems.

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 5. TRENDS IN BUSINESS
OUTSOURCING
Outsourcing has witnessed a massive boom over the past few decades,
with the number of service providing companies increasing every year.
The year 2018 is going to be no different when it comes to keeping up
with this exponential growth in the outsourcing trend. IT outsourcing
trends, this year, have seen a constant growth and this trend will continue
to grow in the coming years.
While there has been a constant growth in this sector, there have also
been several new trends, which have emerged and stayed for the
betterment of outsourcing. However, companies providing the services
need to stay constantly updated with all the latest outsourcing trends
along with some of the most probable future trends in outsourcing to
provide their clients with highly efficient and top-quality services. In this
article, we have listed some of the major outsourcing future trends that
are expected to govern 2018 and beyond.

Outsourcing industry is rapidly growing and is constantly evolving with

time and India has established itself as the hub of reputed outsourcing
companies offering world-class services to global clients. Not only has
the trend of offshoring services grown tremendously over the years, but it
has also been changing frequently. Here, we have listed some of the latest
outsourcing trends that are expected to make new waves in 2018 and
beyond.

Security will be prioritized

Data security will continue to top the priority list when it comes to
outsourcing. With Internet of Things (IoT) and telematics becoming
highly prevalent, security risks are poised to increase. Therefore, threat
intelligence, advanced security automation, security analytics, etc. will
continue to dominate, as companies choose to stay safe and protect their
businesses from external threats.

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Intelligent automation will reduce outsourcing costs

Robotic process automation and intelligent automation will continue to

flourish in the coming years. This is expected to disrupt the existing
commercial outsourcing model and drive down costs considerably,
resulting in supplier margin expansion. Furthermore, enterprise buyers
will also have opportunities to save more, as the supplier margins expand.

Demands for call centers will decrease

With the use of self-service tools and automated chat-bots becoming

highly prevalent among many companies, the demand for call centers is
expected to decrease drastically. As virtual agents can work on numerous
clients at the same time, these automated contact centers will be able to
handle higher volumes with less number of agents. Therefore, we will see
various tech-enabled contact centers replacing the traditional call centers,
few years down the line.

Robotic process to get more intelligent

In the time to come, businesses will see robotic automation tools become
more intelligent. Today, there are several organizations who are working
on adding new cognitive features to robotic tools. Certain amounts of
context awareness will be embedded into the robots of the future, which
include natural language processing and computer vision.

The market will settle down

Last year, the market witnessed a considerable amount of mergers and

acquisitions in IT and business process outsourcing sectors. This trend is
expected to continue and increase in 2018. Therefore, until smaller
players make timely mergers with the right partners, the chances of only
the stronger players surviving in the market are higher.

Cognitive strategies are expected to gain traction

Over the past few years, service providers have come up with a wide-
range of cognitive platforms. However, in most of the cases, providers
have overstated their unproven capabilities, resulting in market hype and
confusion. This year, providers are expected to clarify their messages by
focusing on specific success stories.

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Cloud demands are expected to increase

With an increasing demand for the usage of cloud platforms in

outsourcing, the cloud-savvy clients are expected to demand more from
the cloud providers. Therefore, enterprises are expected to demand
significantly higher value from the cloud providers for driving
transformation in their businesses.

Value-1 ,Cost -0

Companies are expected to look out for service providers who add value
to their business rather than those who just provide services at lower
costs. Therefore, outsourcing companies will partner with service
providers who offer innovative services, equipped with best infrastructure
and thorough industry knowledge.

Machine learning usage to increase

Machine learning, as we all know, provides a series of benefits including

cost savings, faster completion of the processes, and even improved
quality of the services provided. Furthermore, all the outsourcing
solutions cannot be handled by automation, and this is where machine
learning helps. Machine learning helps service providers to offer efficient
services within extremely short turnaround times.

Virtual work to stay

Telecommuting is one trend which has changed the way outsourcing

companies operate over the years and this trend is here to stay.
Companies find it very easy to interact with other team members and
integrate seamlessly through remote meetings and use different types of
real-time monitoring tools to deliver quality services.

Outsourcing trends are constantly changing and this change is expected to

continue in the coming years as well. With new technological
developments progressing regularly, the outsourcing industry is only
going to get bigger and more efficient in the years to come. Companies
will mainly focus on providing top-quality services and great customer
experience, rather than merely focusing on reducing the cost of the
services they offer.

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Previously, outsourcing companies focused mainly on outsourcing non-
core functions to service providers and carry out the core functions by
themselves. However, this trend is expected to change as more and more
companies will now outsource their core functions to highly efficient and
reliable service providers. Today, outsourcing companies look for services
that add value to their business, rather than the ones that merely help
them cut down on their expenses.

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 6. BENEFITS OF BUSINESS
OUTSOURCING
Access to skilled expertise

One of the primary reasons why a business may want to outsource a task
is when it requires skilled expertise. To allow you to focus on your core
mission in providing a high quality product and service to your customer
offshoring the task to people who can perform it better makes sense.

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.

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.

Increase in-house effectivity

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.

Run business 24*7

Offshore outsourcing to a country like India, which is on a different time

zone, gives you the added advantage of making full use of your 24 hour
day. Your outsourcing partner can take over and continue your work even
after your employees go home. They can complete critical tasks and send
it back for your review the next day.

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Staffing flexibility

Outsourcing certain independent tasks, allows your business to maintain a

financial flexibility when there is an uncertainty in demand. You can scale
up or down comfortably. At a much lower cost, offshore outsourcing
provides additional benefit of running your business in full throttle even
during off season and holiday months.

Improvement in service and better experience by customer

Your outsourcing partner, with their skilled expertise will produce quality
deliverables faster, increasing your turn around time to the customer. With
on-time deliveries and high-quality services your customers will be
delighted! Outsourcing can help you benefit from increased customer
satisfaction and thus creating a stream of loyal customers.

Cut in costs and big savings

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 low-cost 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).Maintaining an
infrastructure can be an extra burden for some businesses, which
outsourcing can remove.

Business gets a competitive edge

The ultimate benefit of outsourcing is that it helps your organization gain

a competitive edge in the market. Through strategic outsourcing to an
outsourcing partner, you are not only providing your customers with best-
of breed services, but increasing your productivity while managing your
in-house resources intelligently. Outsourcing can help you surpass
competitors who have not yet realized the benefits of outsourcing.

Overall increase in your business

The ultimate benefit of outsourcing is that it helps your organization gain

a competitive edge in the market. Through strategic outsourcing to an
outsourcing partner, you are not only providing your customers with best-
of breed services, but increasing your productivity while managing your

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in-house resources intelligently. Outsourcing can help you surpass
competitors who have not yet realized the benefits of outsourcing.

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 7. CASE STUDY

7.1 Apple’s manufacturing outsourcing

Brief

Apple started manufacturing manufacturing macintosh computer in 1983

at it's iMac plant in Elk grove,California.In year 2004 ,Apple turned to
foreign companies for manufacturing.It's offshore manufacturing reached
its peak when iconic iphone was introduced in year 2007.The iphone
consists of 100 parts,out of which 90% are manufactured abroad.

Companies core activities like chip designing,software development,and

marketing are done in USA.

Manufacturing of iphone

• Advanced semiconductors : Germany and Taiwan

• Memory : Korea and Japan
• Display panels and circuitry : Korea and Taiwan
• Chip sets : Europe
• Rare metals : Africa
• Apples major subcontractor,a Taiwanese multinational
form ,"Foxconn" performs final assembly in china.

Benefits to apple for outsourcing

• Cost advantages :
Lower cost
High quality service
• Quick response
• Efficiency:
Years of experience
• Skilled resources :
Recruitment

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Potential costs and risks to apple

• Unexpected logistic activities

• Poor quality of products
• Management of suppliers
• Managing outsourcing relation

Ethical problems associated with outsourcing to china

• Poor working conditions
• Low pay to workers
• Poor safety
• Overtime

How can apple fix this problem ?

• Fix strong ethical policy when outsourcing

• Providing technical assistance in improving workng condition
• Cancellation of contract

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 8. SURVEY RESULTS
We conducted survey on business outsourcing and had asked following
questions,the sample size of people was 23,and the link for google form is
given below :

Link :

https://goo.gl/forms/yDT84e3d3yghdeOs2

Question 1 :

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Question 2 :

Question 3 :

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Question 4 :

Question 5 :

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 9. CONCLUSION
Business process outsourcing services bring immense benefits to small
and medium businesses as large corporate entities look for effective
solutions to manage their non-core business functions.BPO aids to
manage more efficiently everyday business records at a reduced price for
large business establishments. This saves data backlogs and helps avoid
adverse effects towards their decision making processes. Outsourcing the
extra jobs to reliable BPO companies are thus a beneficial option to them;
it is how the non-core business data processing procedures and back
office tasks get done professionally, resulting in maintaining business
records that are always accurate and updated.
Business Process Outsourcing services, besides taking the load off the
heads of larger companies, provide better data security, which is essential
for striving and maintaining their core service quality and accuracy, so
data processing and transcription tasks through experienced professionals
is the only way to go !

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 APPENDIX
We are conducting this survey for our project report on "Business outsourcing". Your
responses will help us get better insights for our project.
Please enter your name
(Enter your first name and last name only)

Q.1.Which is better business outsourcing or business insourcing ?

• Business outsourcing
• Business insourcing

Q.2.Do you think business outsourcing leaks business secrets ?

• Yes
• No
• Maybe

Q.3.Do you think outsourcing jobs from other countries good for India ?
Mark only one oval.
• Yes
• No

Q.4.If you were owner of company "Apple" ,would you outsource hardware
manufacturing ?
Mark only one oval.
• Yes
• No

Q.5.If you were owner of company "Google" ,would you insource hardware
manufacturing(Servers,routers) ?
Mark only one oval.
• Yes
• No

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 LIST OF REFERENCES

https://www.entrepreneur.com/encyclopedia/outsourcing

https://smallbusiness.chron.com/difference-between-outsourcing-
insourcing-32400.html

https://www.outsource2india.com/why_india/articles/legal_aspects
_outsourcing.asp

https://www.outsource2india.com/trends/outsourcing_trends.asp

https://www.outsource2india.com/why_outsource/articles/benefit_o
uts

https://www.slideshare.net/robinkuriakose2/case-study-on-apple

https://goo.gl/forms/yDT84e3d3yghdeOs2

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