Business Process Outsourcing
Very simply business process outsourcing can be seen as a
process in which a company delegates some of its in-house
operations/processes to a third party. Thus business process
outsourcing is a transaction through which one company acquires
services from another while maintaining ownership and ultimate
responsibility for the processes. The company then informs its
provider what it wants and how it wants the work performed. So the
company can authorize the provider to operate as well as redesign
basic processes in order to ensure even greater cost and efficiency
benefits.
The main motive for business process outsourcing is to allow
the company to invest more time, money and human resources into core
activities and building strategies, which fuel company growth.
In today’s business environment outsourcing is often not a decision
that needs to be justified. In fact some work that is handled
internally but could be outsourced can be seriously questioned as a
bad business decision.
The global market today is highly competitive and continuously
changing. A company must thus focus on improving productivity and at
the same time cut down costs. Therefore, a lot of processes that take
up precious time and resources are being outsourced. Business
process outsourcing companies are often considered to provide more
flexible, faster, cheaper and effective services.
Business process outsourcing helps free up a company’s capital
and reduce costs. The operations or processes being outsourced vary
from manufacturing to customer service to software development and
much more. Most of the companies that are looking to outsource are
multinationals, or companies from western countries and most of the
BPO units are in countries such as India, China, Malaysia and even
Russia.
One way of looking at it is that business process outsourcing
is just a name for already existing practices. Services such as,
bureau services, contract programming and project management have been
outsourced for a long time. In its present meaning, however, business
process outsourcing refers to a greater level of handing over
ownership and/or managerial control than has before been the case.
Companies turn to resources outside their organizational structure,
usually to save money and/or make use of the skilled professionals.
For instance, a company might outsource its IT management because it
is cheaper to contract a third-party to do so than it would be to
build its own in-house IT management team. Or a company could
outsource all of its data storage needs because it is easier and
cheaper than buying and maintaining its own data storage devices. A
business might also outsource its human resource tasks to another
enterprise instead of having its own dedicated human resources staff.
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