Business process offshoring to India: An overview

Over the last 10 years, reduced international trade barriers have resulted in an increasingly interlinked global economy and intense global competition, putting pressure on business managers across the world to cut cost of operations. Simultaneously, improved telecommunication and data-communication capabilities have opened up new opportunities for spreading business operations at locations across the world that offer significant cost and quality advantages. Reorganization of business models to leverage benefits of business process outsourcing (BPO) and to allow bringing the focus back on core competencies has become a key strategy pursued by large corporations and is gradually becoming more accepted in smaller business organizations as well. Typically business processes that are outsourced involve the contracting of specific business tasks, such as payroll processing, to third-party service providers. Initially business process outsourcing was pursued as a cost-saving measure for those tasks that are required to be performed by a firm but upon which the firm does not depend to maintain its competitive position in the marketplace. However, firms are now outsourcing more customer-facing tasks as well with the maturing of the BPO market. Therefore, the main types of business process outsourcing observed includes: back office outsourcing that includes business functions such as billing or purchasing that are internal to the firm, and front office outsourcing that includes customer-related services such as marketing or technical support that are externally oriented. Today, the numbers of service categories for business process outsourcing have also expanded. The providers of business process outsourcing services are typically expected to return a series of benefits including a combination of higher expertise, lower costs through economies of scale, better scalability, improved methodologies, and greater flexibility of service. This paper provides an overview of the offshore business process outsourcing phenomenon and describes a case study of General Electrics BPO operations in India. Section 2 lays out the background of outsourcing and describes the global BPO market as well as the new categories of services that are being outsourced. Section 3 focuses on India as a destination for BPO services. Section 4 discusses the various forms of business process outsourcing that are evolving in the overseas marketplace. Finally, section 5 discusses GE as a case study in offshore business process outsourcing.