In a globally competitive business environment, outsourcing has become a business necessity. Corporates have realized the importance of outsourcing, which is important to retain their competitive advantage. The outsourcing industry, though driven by technology is highly people-centric. The outsourcing service provider has to continually strive to move up the value chain of the BPO-process, not only to maximize the returns, but also to provide value-addition to the client. This paper examines some fundamental issues like: what to outsource, whom to outsource, advantages of outsourcing, associated risks in outsourcing, and advantages for India. BPOs are indeed an emerging paradigm for businesses in future.
Indian
mythology has it that Maharshi Ved Vyasa, a great thinker and scholar of his time,
conceived the great epic `Mahabharata', all by himself. However, he outsourced
the dictation and productionization of Mahabharata to Lord Ganesha, which he did
very skillfully. Similarly, the security of `Ashwamedha Yagya' in the epic `Ramayana',
was outsourced to Lord Ram's younger brother Lakshman and his `sena'. Therefore,
we can say that outsourcing is not new to mankind. During the Gulf war, the combat
operations were carried out by member nations of the United Nations. The UN can
thus be said to `outsource' the physical security or `peacekeeping' of the troubled
areas to designated member nations. Simply stated, outsourcing in today's context
means "to focus on your best, and outsource the rest". The next question
is, how to decide what to outsource and whom to outsource?
The
idea of outsourcing has its roots in the `competitive advantage' theory propagated
by Adam Smith (1776) in his classic bookThe Wealth of Nations. Over the
years, the meaning of the term `outsourcing' has undergone a sea-change. What
started off as the shifting of manufacturing to countries providing cheap labor
during the Industrial Revolution, has taken on a new connotation in today's scenario.
In a world where IT has become the backbone of businesses worldwide, `outsourcing'
is the process through which one company hands over part of its work to another
company, making it responsible for the design and implementation of the business
process under strict guidelines, regarding requirements and specifications from
the outsourcing company. This process is beneficial to both the outsourcing company
and service provider, as it enables the outsourcer to reduce costs and increase
quality in non-core areas of the business and utilize their expertise and competencies
to the maximum.1 A representative list of business processes commonly
outsourced is given in Appendix of this paper. |
