Date post: | 20-Jan-2015 |
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Business |
Upload: | amanpreetbhamra |
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Business Process Outsourcing
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.
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
Outsourcing Checker
• What to Outsource?• Whom to Outsource?• SLAs (Service Level Agreements)
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?
Outsourcing Pyramid
Require high level of skillsEg- R&D and Management
Level III
Level II For Strategic Initiatives + Skills get higherEg- Payroll and HR admin
Level ICost reduction phaseBasic skills required
Eg- Catering, fleet management
BPO Vs Franchising
BPO Franchising
Non- Core Processes are outsourced
Core product is given as Franchise
Outsourced- Outsourcer Franchiser-Franchisee
Objective is to focus on core function
Objective is to expand business and enter new market
Benefits
Focus on key function
Reduction in cost
Less investment
Specialisation
Freedom of choice
Economic Progress
Limitations
• Lack of secrecy• Potential competition• Sweat shopping• Resentment• Loss of control
Types of Services
Financial Services
Advertising Services
Courier Services
Customer Support Services
Human Resource Services
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.
SWOT- Indian ScenarioAbundant manpower, Operational
excellence; Conducive BE.
Skilled manpower shortage; Local infrastructure; Political opposition
$ 69 billion ITES business by 2010; $ 97.5 billion IT market
ThreatsCompetition from other low cost destinations; slowdown of demand.
Opportunities
Strengths
Weaknesses