Outsourcing provides cost effectiveness to the parent company as they take advantage of the labor arbitrage. Also, the BPO organization providing the outsourcing service provides some cost benefit due to economies of scale, and expertise in that area.

Outsourcing ensures better quality in the deliverables due to the expertise and process excellence of the BPO organization. Similarly, what had been a non-core area for the parent company becomes the main business area for the BPO organization, thus, positively impacting the quality of the deliverables.

Outsourcing helps the parent company to focus on its core competency and core business area, whereas non-core areas are pushed onto BPO players. By focusing on core competencies, these parent companies also manage to increase stakeholder value.

The Indian Perspective

Although the BPO industry contributes only 1-2% to the GDP of the country, but seeing the growth potential and the scope of employment generation (both direct and indirect), the segment is of utmost importance to the country. Indian companies hold about 37% of the global BPO market as of 2005-2006 with combined revenue of 6.3 Billion USD.

The BPO industry has also aided the growth of other industries like Auto, Retail and Real Estate, etc. With late work shifts being the norm in the industry, most companies have a facility to pick up their employees from their home and drop them back after work. And this definitely has had a positive impact on the sales of cars to be used for the same. Similarly, the young crowd at most of the BPO companies prefers wearing the latest branded apparel or sporting the coolest new mobile phone in town, which has come as a boon for the retail industry. The rapid growth of the industry has meant building of new swanky offices, cafeteria, etc., thus, keeping the real estate people busy.

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* Contributed by: -
Devroop Dhar is a Management Consultant with PricewaterhouseCoopers in Mumbai. He has almost 5 years of experience in the field of Consultancy, Project Management, Six Sigma. He is an alumnus of IIM Kozhikode, specializing in Finance & Operations. He has also worked with TCS and Bristlecone in the past, and done an internship with EXL Service. He also holds a BE Degree in Production Engineering from Jadavpur University, Kolkata.
All views expressed in this article are the author's, and not of his employer.