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Drivers of Outsourcing

BPO, in the late nineties has emerged as one of the booming services industries in the whole world. There were business houses that outsourced as and when required but to a very low level. Off late there has been a trend in all big business and industries of outsourcing the work that is not the core competency of the company. There are number of reasons that can be stated as the driving force behind outsourcing. Some of the commonly identified and the most forceful reasons are: -

• Attempt to focus on Core Competencies
  
  The number one driver behind the growth in the BPO market today is an increase in the number of enterprises that are reviewing their internal operations in an attempt to better understand their true core competencies, and focus on only those competencies. All other internally provided services then become candidates for examination in terms of how efficiently and effectively those services are being delivered compared to what is available from an external service provider. This decision-making process often includes an evaluation of the cost of owning technology - with its associated support costs, that are not core to the enterprise (HR applications as an example). This is leading to an increased willingness to outsource processes considered non-core, yet critical - activities such as claims administration, HR services and payment services.

• Desire to Improve Service Levels
  
  A secondary driver of growth in this market is a desire by enterprises to improve their current service levels. BPO offers enterprises an opportunity to do so in many cases, and at the same time removes the requirement for the capital expenditure that would be necessary if the enterprise sought to improve those service levels internally. Service providers who can best communicate their ability to deliver significant process improvement (as opposed to simply taking on an existing process in a status quo manner) are likely to emerge as the market leaders who will change the way in which business has traditionally been done.

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* Contributed by -
Shuchi Singla,
Global Business Operations, Semester-11,
Shri Ram College Of Commerce,
University Of Delhi.