Outsourcing
Articles >> 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.
