Academic journal article Political Economy Journal of India

Outsourcing: -A Sunrise Sector in India

Academic journal article Political Economy Journal of India

Outsourcing: -A Sunrise Sector in India

Article excerpt

Introduction

In this increasingly competitive world, it can be contracted, to reduce the costs and maximize profits, without compromising on quality and time. Such a contract is known as outsourcing, which is a powerful management tool for redefining and re-energizing any organization. It is useful, not only for maximizing the present profit of the organization with the existing clientele, but it also relieves and enables the employees to work on higher value added jobs. BPO industry is a young and emerging sector in India and has now become a very important part of the export-oriented IT software and services environment. It initially began as an activity confined to multinational companies, but today it has developed into a broad-based business platform backed by leading Indian IT software and services organizations and other third party service providers. Today, Indian companies are offering a variety of outsourced services ranging from customer transcription, billing services and database marketing, to web sales/marketing, accounting, tax processing, transaction document management, telesales/telemarketing, HR hiring and biotech research. In this paper an analysis has been made to highlight the concept of BPO, its stages and phases of growth, some of the recent developments and implications of BPO sector.

The Concept of BPO Defined

Business process outsourcing (B.P.O) is a form of outsourcing which involves the contracting of the operations and responsibilities of a specific business function to a thirdparty service provider. This is a way to improve operational performance while reducing costs. In the developing countries, outsourcing is becoming a trend in information technology and other industries for services that usually has been regarded as intrinsic to manage a business.

BPO refers to a decision to sub-contract some or all non-core processes. 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 fuels companies growth. Business Process Outsourcing (BPO) is the delegation of one or more IT-intensive business processes to an external provider that in turn owns administers and manages the selected process based on defined and measurable performance criteria.

BPO has been the latest mantra in India today. As the current sources of revenue face slower growth, software companies are trying new ways to increase their revenues. BPO is on top in their list today. IT services companies are making a quick entry into the BPO space on the strength of their existing set of clients.

India became a prominent destination for outsourcing in the services sector in the 1990s. Outsourcing to India started with the growth of IT industry, which has responded to the changing market requirements by increasing the scale of operations and capability to handle complexity. The Indian software industry, according to Kris Gopalakrishnan, CEO, Infosys Technologies Limited, has gone through the following four stages of development:

Stages and Phases of Growth of BPO

1. 1970s to early 1990s: There was a shortage of skills and cost was the prime driver for outsourcing to India. Companies focused on expanding their skill sets during this period.

2. 1994 to 1998: This was the most crucial time for IT outsourcing in India. The post liberalization reforms helped the already existing companies to speed up expansion. New companies also got support in the form of incentives from the government. The important tasks outsourced to India during this period were medium and large application projects on legacy migration and enterprise wide IT and problems related to Y2K syndrome. The companies focused on acquiring diverse skills and execution capabilities, along with achieving client delight through productive and quality delivery of projects.

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