1. Business Process Outsourcing

2. Origination
 It originated from the theory of core competence suggested
by C. K Prahalad.
 A Business Enterprise identifying the areas of
specialisation and focus on them only;
 and get non-core functions performed by outside
agencies.

3. Meaning
 The contracting out of a company’s non-core in-house
function to a preferred vendor with high quality level
In a particular task area.
 Examples-
 A manufacturing company outsourcing its accounting work
to an outside accounting firm, or
 A telecommunications firm using an outside company to
handle customer service

4. Outsourcing Checker
• What to Outsource?
• Whom to Outsource?
• SLAs (Service Level Agreements)

5. Outsourcing Guide
• What is a good starting point for an outsourcing
programme?
• Are there enough external service providers?
• Are you convinced by the quality?
• Are you getting benefits of scales of economies?
• Is your corporate culture ready for it?
• Is it a long term relationship?

6. Outsourcing Pyramid
Level III Require high level of skills
Eg- R&D and Management
Level II For Strategic Initiatives + Skills get higher
Eg- Payroll and HR admin
Level I
Cost reduction phase
Basic skills required
Eg- Catering, fleet management

7. BPO Vs Franchising
BPO Franchising
Non- Core Processes are Core product is given as
outsourced Franchise
Outsourced- Outsourcer Franchiser-Franchisee
Objective is to focus on core Objective is to expand business
function and enter new market

8. Benefits
 Focus on key function
 Reduction in cost
 Less investment
 Specialisation
 Freedom of choice
 Economic Progress

9. Limitations
• Lack of secrecy
• Potential competition
• Sweat shopping
• Resentment
• Loss of control

10. Types of Services
 Financial Services
 Advertising Services
 Courier Services
 Customer Support Services
 Human Resource Services

11. Key Success Indicators
 Analyze process, cost and determine savings;
 Define roles and responsibilities;
 Have measurable performance indicators –
(Speed of transactions, time period to close books, etc.)
 Develop a detailed transition plan- smooth hand off;
 Develop a clear Dispute resolution process;
 Monitor results for continuous improvements.

12. SWOT- Indian Scenario
Strengths Abundant manpower, Operational
excellence; Conducive BE.
Weaknesses
Skilled manpower shortage; Local
infrastructure; Political opposition
Opportunities
$ 69 billion ITES business by 2010;
$ 97.5 billion IT market
Competition from other low cost
Threats
destinations; slowdown of demand.