Emalgam - Your Life . Period-Business Process Outsourcing

Why BPO?
BPO - Areas
Consulting and RFP
BPO Benefits
Summary

bpo Why BPO?

Leveraging of technology or specialist process vendors to provide and manage an organization's critical and/or non-critical enterprise processes and applications.
The most common examples of BPO are call centers, human resources, accounting and payroll outsourcing.
BPO or Business process outsourcing may involve the use of off-shore resources.
BPO means delegating the ownership,administration, and operation of a process to a third party.
BPO is about solving a business problem.
BPO aims to raise a client company's shareholder value because it is about delivering outcomes-that is, higher-performing business processes.
Companies essentially have three kinds of processes: core processes (which give strategic advantage), critical, non-core processes (which are important but are not competitive differentiators), and non-core, non-critical processes (which are needed to make the environment work).

However, outsourcing does not mean handing over an entire process

It generally means turning over to a BPO provider the "how" aspects of a process-the systems, infrastructure, administration, execution, and some of the design of non-core processes.
The company retains the "what" aspects of the process-the governance, policy-setting, decision making, and strategy of these processes.
The intent is to outsource the execution of a process while retaining the direction-setting part.

Companies generally outsource four types of processes:

processes that link to suppliers (supply chain management)
processes that link with customers (sales, marketing, and customer care)
production processes (R&D, contract manufacturing)
support processes (finance, HR). Examples of processes now outsourced include human resources, employment, accounting, finance, procurement, travel, the order-to-cash process, cafeterias, payroll, landscaping, real estate, manufacturing, advertising, and on and on-any process that is not core and should improve if managed by a specialist.

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bpo Business Process Outsourcing - Areas

Major Areas Of Bpo Sector

IT enabled services (ITES)
E-logistics
Management of facility & operations
Legal services

Types of BPO There are several types of BPO providers. One way to categorize them is as:

transaction
niche
comprehensive

Transaction providers handle a single process (such as payroll), at their sites and with their people. They are accountable for the transactions only, and they are paid per transaction. This form of outsourcing is easiest to manage, but it can also fragment operations because different pieces are handled by different providers.

Niche providers handle several processes (such as employment, which includes hiring and staffing). They may work at their site (or the company's) and they may take on some of company's staff. They are accountable for the outcomes of those processes (such as reduced time to hire or lower attrition), so they may be paid based on outcomes.

Comprehensive providers handle the transactional and administrative processes of a function (such as HR). They work globally, they aim to increase process effectiveness, and they are generally paid based on outcomes. This is the newest form of BPO and it involves the most change because the providers introduce new and better practices and processes.

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bpo BPO Consulting and RFP Proposals

TIPs for BPO Proposals

When issuing a BPO request for proposal (RFP), explore the "realm of the possible" by focusing on "what" you want done.Keep the "how" in your RFP to a minimum

Every provider has unique capabilities, so it's best to let them propose different processes (the "how") rather than try to force fit them into one way of working.

Focus on the outcomes you want. The problem most prospective BPO clients encounter up front is understanding the cost of the process they plan to outsource. Their estimates are often one-half the true cost, for several reasons.

Department budgets are below true costs because of internal overhead allocations. Companies do not count all the people or the technology support costs in a process. And the costs of the process in outlying offices are often not known.

That's why many BPO clients often do not know whether a provider's proposed service levels are any better than their own, because they have no benchmark of their internal operation to use as a comparison. That's also why companies may back off from BPO. For the first time, they see all the hidden costs they have never measured and start to wonder whether BPO will really reduce costs. They also fear losing control of their process, so they see their process more favorably than the providers' processes.

At emalgam we help companies work through these emotional issues and bring the benefits and hurdles of BPO into a more realistic light. As with ITO, service level agreements (SLA) are at the heart of the deal.

Without good benchmark data, client companies start out negotiating from a disadvantage. Successful management means having the appropriate governance model, processes, and skills in place, so that the relationship evolves with the business environment.

At the moment, outsourcing end-to-end BPO processes is not for the faint of heart because it does involve transforming processes. But it can also lead to more world-class processes than clients would implement on their own. Outsourcing is not a one-time event; it is continuous. Companies that outsource one process later outsource another, then another-as their strategies change and new outsourcing options open up. The outsourcing field is thus not slowing down. At the moment, BPO is the driving force, and it is developing fast.

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bpo BPO Benefits

Cost reductions- Cost reduction is done through process improvements, reengineering and use of technologies that reduce and bring administrative and other costs under control.

Concentration on core business- With the day-to-day back office operations taken care of, the management is free to concentrate more on the core business of the company.

Outside expertise- Company is saved from the hassles of recruiting and training personnel. BPO's ensure that experts from another company provide the needed guidance and skills.

Cater to changing customer demands- It is another great advantage of out sourcing the business processes. Many BPOs provide the management with flexible and scalable services to meet the customers' changing requirements, and to support company acquisitions, consolidations, and joint ventures.

Revenue increase- As stated above, by outsourcing non-core processes, companies can concentrate on increasing their sales and market share, develop new products; spread out into new markets and increase customer service and satisfactions.

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Summary

Business process outsourcing (BPO) is defined as delegating an IT enabled business process to a third party that owns, administers and runs the process according to a laid set of metrics. Outsourcing is much more than purchasing and consulting. It is a long-term result-oriented relationship for a whole business activity over which the provider has a large amount of control and managerial discretion.

Outsourcing is the use of outside business relationships to perform necessary business activities and processes on basis of internal capabilities, i.e. examining the processes that make up the business and its functional units, and then working with specialized service providers to both reengineer and outsource these at the same time.

Outsourcing is all about making certain that every organization continues to deliver the very best services possible. It’s about giving people an opportunity to advance in their chosen field beyond the boundaries of their current organization, contributing to customers, harnessing changes and achieving excellence.

Outsourcing is based on the business philosophy that you should squeeze out any business activity that isn’t of core competence. In real terms, it represents a means to achieve a competitive advantage by enabling your business to focus on its core competencies. Successful companies are incorporating outsourcing as a key strategy for their growth and differentiation and have accepted outsourcing as a critical factor for business survival for it is said to be needed in both, bad times to cut operating costs and good times to focus on company’s growth.

Strategically, outsourcing is an effective business strategy for staying ahead of the competition, while enhancing productivity and profitability. Organizations around the world are redefining themselves through outsourcing, which is NOT abdicating responsibility but leveraging outside capabilities. Organizations outsource because they want to leverage the distinct skills and resources of the other organization to the benefit of their company and their company’s customers.

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