Objectives of Business Process Outsourcing

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Companies that offshore their business processes to India are no longer looking at cost reduction alone. They typically want to achieve:

    Process improvement and efficiency - faster turnaround and greater productivity
    Cost savings
    Reduced head count
    Improved quality - less errors/rework
    Building/strengthening presence in a new market/foreign country
    Increased focus on core competencies - e.g. developing new products or services
    Building business value and strategic differentiation

All of the above add up to help these companies achieve increased competitiveness through BPO.

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BPO buyer-supplier trends: working towards 'win-win'

Buyers and providers of outsourcing services are using sophisticated financial mechanisms and business intelligence among other methods to achieve their outsourcing business objectives. Both parties want to minimize risks, increase operational efficiencies and boost revenues. An integrated approach helps achieve win-win solutions.
Buy-side

    Client-vendor relationships have matured to a collaborative, partnership approach to offshoring
    When it comes to negotiating deals, clients prefer the BOT model (Build-Operate-Transfer) as it mitigates risks and has a greater level of client control. Service providers too get a higher level of profit margins
    Stringent SLAs specifying performance levels
    Exit clauses citing weak governance, infrastructure or security issues are some of the ways that clients seek to cover risks
    A shift from buying commodity services to complete business solutions and better ways of doing things

Sell-side

    Change management - cultural orientation, communication, transition process, transparency, retention strategies for key personnel
    Geographic expansion
    - Adding new infrastructure in Tier II cities in India, to attract new talent and achieve lower attrition rates
    - Partnering with companies in other countries to provide nearshoring/multi-shoring options
    A shift away from fixed-price models, as service providers offer bundled services or move towards higher-end strategic processes. Thus a shift in focus from reducing costs to providing greater business value.
    Greater focus on industry verticals and domain expertise (judgment-based services) rather than function-specific, volume-driven processes driven by business rules.
    Greater cost control and cost reduction through efficient capacity utilization, cost planning and training