Essay and Answer Writing → UPSC Essays

Business Process Outsourcing in India: a booming phenomenon? [2007]

In the last few decades, business process outsourcing (BPO) has become incredibly popular with companies ranging from Fortune 500s to start-ups. In India BPO is the fastest growing segment of the ITES (Information Technology Enabled Services) industry. Factors such as economy of scale, business risk mitigation, cost advantage, etc. have all lead to the growth of the Indian BPO industry. Business process outsourcing in India, which started around the mid-90s, has now grown by leaps and bounds. India is now the world's favoured market for BPO companies, among other competitors, such as, Australia, China, Philippines and Ireland. The BPO boom in India is credited to cheap labour costs and India's huge talent pool of skilled, English-speaking professionals. The essay focuses on the rise of BPO in India, its causes and its future. 
 
What is BPO?
Business Process Outsourcing, or BPO, refers to the process of contracting standard business functions to be handled by a party outside of the company.  A BPO service provider usually administers and manages a particular business process for another company. BPOs either use new technology or apply an existing technology in a new way to improve a particular business process. India is currently the number one destination for business process outsourcing, as most companies in the US and UK outsource IT-related business processes to Indian service providers.
 
Indian BPO companies offer varied services, such as, customer supporttechnical supporttelemarketinginsurance processingdata processingforms processingbookkeeping and web research. 
 
BPOs: the advantages
Analysts believe that India is a vital destination for outsourcing and expect its annual GDP to grow at 8-10% for the next decade. In addition, outsourcing efforts to India are held as an effective remedy for concerns about both Chinese government policy and labour force issues, such as increasing costs and shortages.
 
·The BPO companies are narrowing down the geographical barriers
·It is seen that through the BPO sector, the social stature of India has improved to a greater extent. 
·The domestic call centres have put the name of India on top of the global Map. This sector has largely contributed to the nation’s growth and it is transforming within a short time. 
·The call centres in India have made a sustainable and long-lasting impact on the overall growth of the economy of the country within the last 10 years. This sector has empowered diverse human resources. As per the study conducted by the NASSCOM, this sector is still in the nascent stage. It is constantly looking for ways of improvement.
·As the ITES or BPO sector is booming, more and more employment opportunities are coming in front. This has been reducing the problem of unemployment in India to a great extent.
 
The disadvantages
Some general drawbacks of increasing BPOs are listed as below:
·Data Breach - Outsourcing often requires that companies share sensitive data and information with their service providers, creating the likelihood of a security breach.
·Because the costs of the services BPO offers are so low, businesses risk the chance of underestimating how much money they are spending on business process outsourcing services.
·When a service provider is based thousands of miles away, quality assurance can sometimes be a challenge. Language barriers can further complicate the BPO process, as communication gaps can delay productivity and feedback, leading to wasted time and money.
·The rapidly growing industry requires growth in infrastructure as well. However, this is an area where India lacks, and this issue need to be addressed to keep up with the competition.
 
In India, the BPOs have attracted criticism too. Shehzad Nadeem, of the Sociology Department at Lehman College, City University of New York, reports that Indian call-centre employees, to confirm to expectations of the US consumers who they support long-distance, are expected to imitate the Western employees they have replaced in terms of the use of US vernacular, even temporarily adopting an Anglo name during the call. While this is true, Nadeem claims further that this temporary switch to an American-like identity inflicts psychological distress, and has led to the adoption of Western-style-consumer lifestyles by the employees, who earn far more than their compatriots.
 
Another point that should be considered while outsourcing, not only to India but any other region, is Intellectual Property Protection. When companies outsource their work, they have to dilute their core knowledge related to process before transferring it to outsourcing. If they fail to do this, BPO can learn enough about the outsourcing organisation's business to compete with them later by offering similar services in their own country or even multi-nationally.
 
Conclusion: the future of BPO in India
In the recent years, India has occupied the superior slot in Business Process Outsourcing. The unfathomable success rate is due to the fact that there is availability of resources required in this field. IT and BPO Services Market in India 2018-2022, has been prepared based on an in-depth market analysis with inputs from industry experts. The report covers the market landscape and its growth prospects over the coming years. The report also includes a discussion of the key vendors operating in this market. According to the report, one driver in the market is rising cost pressure to maintain in-house IT systems. Globalisation has resulted in labour arbitrage, which has shifted the business processes to less expensive locations. Labour arbitrage is regarded as one of the prospective benefits of business process outsourcing and knowledge process outsourcing processes. Outsourcing of data analytics processes helps them gain access to skilled talent and advanced analytics technologies in another country with the maintenance of a lean workforce.
 
(Sources: Wikipedia.com / met-technologies.com / prnewswire.com)



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