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Gurgaon Business - Business Process Outsouring (BPO) Demystified
BPO or Business Process Outsourcing
BPO or Business Process Outsourcing is one of the popular business practices in today's competitive environment. The Indian BPO industry is constantly growing. According to India Infoline, the ITES-BPO segment registered a growth of 59% this year to reach US $2.3 billion and is projected to grow 54% to $3.6 billion in 2003-04. However, along with the phenomenal increase in BPO to India there has been a backlash against outsourcing. These enraged cries come from parties that have been affected by the migration of jobs to offshore locations like India. Though this anti-outsourcing movement is gaining mometum, it is important to understand the long term benefits of outsourcing and of BPO India.
BPO - Benefits
This is the crux of the pro-outsourcing argument. BPO India offers benefits not only in terms of cost reduction, but also in terms of increased productivity and quality. Companies along with their customers benefit since they can access some of the best talent and expertise in the industry at lower rates.
BPO - Cost Savings
NASSCOM has tried to address some of the concerns voiced by anti outsourcing parties especially about the benefits to the American economy.
The study shows that US businesses have witnessed significant cost savings by offshoring to India.
The US banking, financial services and insurance (BFSI) sector's costs are 7-10% lower than that of it's European counterparts American BFSI companies have saved $6 billion in the last four years by offshoring to India.
BPO - Creates Jobs
Nearly 170 Indian IT companies have offices in the US and they employed nearly 60,000 people in the US in 2001. These people paid nearly $810 million in taxes in 2001. Employees of Indian IT firms bought goods and services worth $1.2 billion in the US and paid nearly $300 million as social security in 2001.
BPO - Value Addition
The report gives a striking example of the success of the automobile industry in the US due to outsourcing. Today, this industry is the largest in the world and two of the biggest automobile companies are American. The industry has the same number of professionals it did in 1994 as it did in 1974, which is 900,000. Over this same period sales and services in this sector grew 20% from 2 million to 2.4 million. Outsourcing gave this industry a competitive edge and opened up opportunities in terms of investing in new equipment and re engineering processes.
The US steel industry, however, resisted outsourcing and suffered greatly despite several tariffs and quotas.
BPO - Long Term Benefits
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