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A Revolution
Like a tsunami, every revolution starts slowly and then accelerates. BPO firms in India that started off in the early 1990s have seen a similar transformation and are today on the threshold of creating a revolution that touches not only the 600,000 people directly employed by them, but millions of others who are associated with them. The industry has notched up revenues in excess of US $7 billion in 2007 and is all set to exceed US $10 billion in the next few years. In short, the BPO industry has achieved in less than a decade what the IT industry took over 20 years to achieve.
As the industry has grown from a zero base, it has absorbed people from different industries. Today, it stands out as a unique business that employs the largest variety of professionals graduates, undergraduates, chartered accountants, people with B.Com degrees, engineers, MBAs, graphic designers, animation experts, investment bankers, data entry operators, presentation specialists, lawyers, paralegal assistants, equity research specialists, analysts, doctors, etc.
1. You go to a bank and open a new account. The form gets updated by someone in the system and you soon get a mail with your new account number and password.
2. After you travel and come back to office you submit your bills, someone checks it and credits the amount to your bank account.
3. You buy a mobile phone and someone in the service providers back office needs to set you up on the network and provision you with the right set of services.
4. A research professor wants to get details on a certain area and does not have time to surf through a detailed website. He seeks the help of someone like a research assistant.
5. An insurance company wants to identify the highest liability age group for a certain product. They have the data, but want someone to analyze it.
6. Your personal computer crashes and you need to get it fixed in time for an urgent presentation. You call up the toll free number of your PCs manufacturer and someone helps you troubleshoot and solve the problem.
7. You need to book a ticket and call the leading airline company. Someone helps you with the best rates, books your ticket, charges your credit card and sends you confirmation by email.
8. There is an accident (in the US) and call is placed to 911. Someone takes the call and sets in motion a series of actions aimed at solving the injured persons problem at the earliest.
Savings from labour arbitrage is a key benefit of the global outsourcing business. Developed economies have higher minimum wages and taxes. The cost of living is extremely high compared to developing countries. The growth of China and Taiwan in manufacturing, India and east Europe in IT and India and Philippines in call centres and BPO firms are classic examples of large corporations using global cost economies to their advantage.
Models of BPO
VRIO Porters Model Hamel and Prahlad Inside Out Corporate Strategy Model
Value
Value means if the organisations resources and capabilities add value seen from the outside.
Value can be developed by exploiting changes in the environment. But this very often demands a change in the resources and capabilities of the organsation.
Rareness
If the resources and capabilities of a company are rare, they are often valuable and can give a competetive advantage
Imitability
If a companys resources and capabilities are difficult to imitate, it can gain a competetive advantage. There are 3 typical ways of doing this: 1. To have a long history, developing a strong organisation, method and respectability 2. To make many small decisions, so it becomes difficult for competitors to isolate and copy the companys resources and capabilities 3. To create a good co-operative spirit in the company
Organization
Barney understands organization as formal structure. For instance: Quality control Stock management Accounting systems Salary agreements of bonus systems Employees should be organizable are they able to submit to the organizational systems. Also the systems can both strengthen and weaken the company by being either appropriate or too rigid
Answering VRIO
The Question of Value "Is the firm able to exploit an opportunity or neutralize an external threat with the offer?" The Question of Rarity "Is control of the resource/capability in the hands of a relative few?" The Question of Imitability "Is it difficult to imitate, and will there be significant cost disadvantage to a firm trying to obtain, develop, or duplicate the offer?" The Question of Organization "Is the firm organized, ready, and able to exploit the offer?
Types of BPO
The world of business transformation outsourcing may be split under three broad heads: Process outsourcing BPO. IT outsourcing application, maintenance and development. Infrastructure outsourcing.
CC can be seen any combination of specific, inherent, integrated and applied knowledge, skills and attitudes Dismiss the portfolio perspective as a viable approach to corporate strategy Primacy of SBU is now clearly an anachronism Corporation should be build around a core of shared competencies
Integrated IT BPO organizations are better suited to win these contracts. This is in line with what we see in India. Most companies that started their operations with call centres and scaled their business with them, are increasingly looking at growth from knowledge process outsourcing (KPO) and the non-voice side of business. The scope for intelligent optimization here is immense. Indias large educated population is well suited to meet these requirements.
Legal process outsourcing, medical transcription, remote diagnostics, sales order processing, procurement, claims processing, finance and accounts services, insurance claims processing, mortgage processing, securities underwriting, equity research, secretarial services, language translation etc. the list can go in terms of the work that can get outsourced.
In emerging countries like India and the Philippines, the word BPO is loosely used for any non-IT outsourcing work. Globally, contact centres or call centres as a business are distinctly separate from BPO. Given the dominance of India in the IT market, another term used to describe BPO/contact centre work is ITES (IT enabled services). Work done by voice-centric BPO companies would normally be in the customer relationship management (CRM) space.