If there’s something we cannot do more efficiently, cheaper or better than our competition there is no point of doing it and instead we should hire someone who would do a better job than us. This famous quote by Henry Ford is the motto of many outsourcing companies, and especially organizations which handle business process outsourcing (BPO). The above quote is also ever-present in statements and publications in which authors describe outsourcing-related issues. Ford’s words ideally convey the essence of outsourcing.
Business Process Outsourcing is of the most rapidly developing branches of industry. Its roots can be traced back to the 1980s, when information and communication services began developing in India at a fast pace. India was one of the first countries to notice the potential in carrying out processes for entities situated in remote geographic locations. Subsequently, other countries began offering BPO services. According to Everest Group’s report, published in November of 2011, it is considered that five countries currently have a well-developed outsourcing market. These countries are: India, the Philippines, China, Brazil and Poland. The term developed market means that at least 50 BPO centers or advanced IT services centers operate within a given country. Poland is the first European country with a developed outsourcing market. Currently ¼ of all centers operating in Central and Eastern Europe are located in Poland. Poland’s popularity, as well as the popularity of other countries in the CEE area, increases with each following year, as this geographic region currently provides the best possible comprehensive services and advanced BPO services.
The sum of all factors crucial to launching and providing BPO services varies and is composed of many elements. The most significant of these include:
The list is much longer. The above includes only the key conditions taken under consideration when establishing an Operation Center capable of providing a full range of BPO services. This concerns both international BPO corporations and small, local companies.
BPO services are mainly used by large, developed organizations and by the public sector, but also by Tier 2 companies – corporations which do not classify in the TOP 100 or even TOP 500 most recognized companies in international rankings, but are assessed as – due to their structure, revenue, or transaction volumes – SMEs (small and medium enterprises); either within the upper limits of this classification or just beyond it.
When entrusting its processes to an outside company, the ordering party must be convinced that the quality of these services, as well as their timely execution and effectiveness, will not suffer. Often it is expected that the outsourcer will introduce improvements or innovations. BPO companies must fulfill these expectations and prove that they are capable of working steadily in a safe environment, while maintaining the highest level of quality over a long period of time.
The economic and political stability of the given country or region where the BPO center operates is also an important factor, taken under consideration when choosing a new business partner. Political and military upheavals that took place in North African countries in the beginning of the year 2011 increased the risk involved with maintaining a BPO center in that region, despite the fact that the sector had been developing in Africa at an excellent pace for many years. Previously Egypt was considered the best location for establishing operating centers. BPO centers were established in Egypt by companies such as: Vodafone, Infosys and Wipro. As reported by Age Magazine, Vodafone decided to transfer its center to Great Britain due to the political situation in North Africa, to ensure the safety and stability of provided services. Other global investors also decided to retreat to their own locations and search for new and safe business regions, creating an opportunity for Poland and other Central and Eastern European countries. The migration of BPO centers out of Egypt has become an important issue for the country’s government. Biztech Africa informed that a team of experts was appointed in March of 2011 to maintain and stabilize the Egyptian BPO sector.
Geolocation is yet another important criteria; both for investors and for the BPO sector’s clients. On the one hand locating centers in a completely different time zone may cause business processes to be completed within one business day (e.g. data input, reports, presentations, financial analysis, programming, back-office tasks – including email and fax correspondence or customer inquiries sent via websites), but it may also lead to communication challenges. On the other hand, cooperation with a company from the same or neighboring time zone may allow for quicker communication, but process realization periods remain the same; in this case more advanced processes can be delegated, which require ongoing contact between the ordering party and the BPO center, such as receivables management, management of accounts receivable, debt recovery processes, purchases, taxes, employee recruitment, staff-related processes, legal matters (LPO – Legal Process Outsourcing), or knowledge-related processes (KPO – Knowledge Process Outsourcing).
The full article can be downloaded from the Outsourcing&More web page.