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BPO: Business Process Outsourcing

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  1. BPO: Business Process Outsourcing Leanna Dertinger, Jana Earnshaw, Mitsuru Kajio, Jesse McShane & Simon Seid

  2. Terminology • Outsourcing • Offshoring • BPO • ITO • Fragmentation

  3. History of BPO • World War II • Increased international trade • 1960s – 1980s • Importing turns to outsourcing • 1990s – Present • Services now outsourced • BPO begins

  4. HP Goes The Distance For P&G • Corporate Culture & Brand • Finance and Accounting • Bangalore & Mumbai, India • Global Customers w/ Local Support • Core Competencies cut Defects

  5. Global Accounts Payable Processing

  6. BPO Advantages • Productivity Improvements • Cost Savings • Improved HR • Focus on Core Business Competency • Increased Capability

  7. Benefits

  8. BPO Disadvantages • Recent Studies • Knowledge Disappears and is Transferred to the Outsourcing Partner • Poor Quality Control • Restoring Operations is Complicated • Lack of Loyal Employees • Reduction in Strategic Alignment

  9. Video

  10. Why BPO in India? • Language • Education • Quality - Communication - No pirated products • If Chinese Government Policy changes, what will happen? - Turning point will be by 2010

  11. India Educational System Cost Advantage Time/Distance Advantage English proficiency Government Support Quality Labor Pool China Educational System Cost Advantage Time/Distance Advantage Close to Japan Comparison: India versus China

  12. India Development of software Call center IBM China Manufacturing of components Japanese IT Companies Matching Process to Market

  13. Source: BusinessWeek, The Future of Outsourcing

  14. Hot Players in Outsourcing Source: BusinessWeek, The Future of Outsourcing

  15. 5 Managerial Steps That Pay Off • Go Offshore for the right reasons • Shifting a broken process overseas may not fix it • Choose your model carefully • Could cost more…..(I’ll fix this part) • Get your people on board • Employees and middle managers can make the bold move happen….or stop you in your tracks

  16. 5 Managerial Steps That Pay Off • Be prepared to invest time and effort • Often what is lacking in offshore partners is a lot of deep process knowledge • Treat your partners as equals • Telling your partners exactly what to do and how to do it is not conducive to the entire process

  17. Examples • Penske and India’s Genpact • Eli Lilly

  18. Sources • Gibson, Stan. “HP Goes DistanceFor P&G,” eWeek, 3/20/2006, Vol. 23 Issue 12, p49-52, 3p. • “A world of work,” The Economist, November 13, 2004, pp. 6-7. • Booton, Bob (2005). Outsourcing in a box. San Jose, CA: Bidness Books Publishing. • Engardio, Pete, "The Future of Outsourcing," Business Week, January 30,2006. pp. 50-58. • Kripalani, Manjeet, "Five offshore practices that pay off," Business Week, January 30, 2006. pp. 60-61. • http://economictimes.indiatimes.com/articleshow/1468167.cms • http://www.behtimes.com/article/123/7/ • http://us.rediff.com/money/2004/jan/08bpo.htm • http://globalconnect.ucsd.edu/taipei/documents/Inter-RegionalPartnershipsAnIndiaPerspective.pdf • http://www.cyfuture.com/business-process-outsourcing.htm • http://www.bpoindia.org/ • http://www.xicom.biz/research.html • http://www.networkworld.com/news/2004/0407updatibm.html • http://encarta.msn.com/encyclopedia_701702628/Outsourcing.html