What is outsourcing of business? how does it works?

Answer 1

The business process outsourcing industry in India has grown by leaps and bounds and as its size increases so does its competitive advantage. Compared with 1996 when this Industry had started inroads into the United States with Outbound Tele-marketing campaigns, today the vehicle for these calls-the internet has become cheaper and more reliable for the average Indian business.

The business has boomed to the extent that many people are now running BPO’s out of their cyber cafes and houses in New Delhi.

The sector witnessed considerable activity during 2004-05, including a ramping up of operations by major Indian and MNC players and stepped up hiring. The domestic BPO market, catalyzed by demand from the telecom and BFSI segments, matched the growth of BPO exports. The market experienced maturity and consolidation, a result of numerous mergers and acquisitions taking place within the sector. There were over 400 companies operating within the Indian BPO space, including captive units (of both MNCs and Indian companies) and third-party services providers.

The Indian BPO industry remains on a growth path, emerging as one of the key investment markets in the country.


Figures from a recent survey carried out by PricewaterhouseCoopers

An Indian call centerGlobal BPO Market by Industry
Information Technology 43%
Financial Services 17%
Communication (Telecom) 16%
Consumer Goods/ Services 15%
Manufacturing 9%

Global BPO Market by Geography
United States 59%
Europe 27%
Asia-Pacific (incl. Japan) 9%
Rest of the World 5%

Size of Global Outsourcing Market
2000 USD$ 119 Billion
2005 USD$ 234 Billion
2008 (est.) USD$ 310 Billion

Size and Growth of BPO in India
Year Size (US$ Bn) Growth Rate
2003 2.8 59%
2004 3.9 45.3%
2005 5.7 44.4%

Currently the Indian BPO Industry employs in excess of 245,100 people and another 94,500 jobs are expected to be added during the current financial year (2005-2006)

Call Center Employee cost
USA US$ 19,000 annually
Australia US$ 17,000 annually
Philippines US$ 9,050 annually
India US$ 7,500 annually

Nearly 75% of US and European multinational companies now use outsourcing or shared services to support their financial functions. 72% of European multinational companies have outsourced financial functions over the past two years.

Additionally, 71% of European companies and 78% US companies plan to use these services in the next 12-24 months. Overall, 29% of US and European companies expect to increase their use of outsourcing of financial functions, with spending expected to be nearly 16% higher than current levels.

Growth in this sector will get a further impetus as Indian BPO companies have robust security practices and emphasis is laid in developing trust with clients on this score. While earlier there were varying quality standards on this aspect, today there is focus on standardization of security, such as data and IP security.


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Cities that are leading BPO-ITeS hubs in India today:

Bangalore
Chennai
Hyderabad
Mumbai
NCR (Gurgaon, Noida, Faridabad, Greater Noida)
New Delhi
Pune
These are Tier I cities that are leading IT cities in India

With rising infrastructure costs in these cities, many BPO's are shifting operationsto Tier II cities like:

Ahmedabad, Amritsar, Bhubaneshwar, Chandigarh, Guwahati, Indore, Jaipur, Kanpur, Kochi, Kolkata, Mangalore, Mohali, Mysore, Nagpur and Srinagar.

Tier II cities offer lower business process overheads compared to Tier I cities, but may have a less reliable infrastructure system which may hamper dedicated operations. The Government of India in partnership with private infrastructure giants is committed to bringing all around development and providing robust infrastructure all over the nation.

Answer 2

Outsourcing (or contracting out) is often defined as the delegation of non-core operations or jobs from internal production within a business to an external entity (such as a subcontractor) that specializes in that operation. Outsourcing is a business decision that is often made to lower costs or focus on competencies

Eg. Some company outsource their Finance function to outsourcing firms.

Or a very common phenomenon is a lot of US firms have outsourced their IT sales support team to India call centres...

Answer 3

Outsourcing is where large companies hire smaller companies to perform work for them at a much lower cost. Usually involves companies in the US transferring work to foreign companies where the pay scale is much lower. Saves corporations a lot of money but quality of customer care is lowered severely.

Answer 4

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Answer 5

They find countries with the lowest wages that are able to still produce merchandisable goods. The quality may not be as good, but the amount they pay their workers could be as low as pennies on the dollar in comp[arison to what they pay workers here in the U.S. to produce the same goods. The products produce in other countries are then shipped back to the U.S. for distribution to wholesalers and retialers.

Answer 6

it is giving your work to a company that can produce the same thing as you for a cheaper price, usually outrside of the country.
have the mmake it for you,you sell it na dkeep the bigger profits

Answer 7

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