Business Process Outsourcing is a structured arrangement between - TopicsExpress

Business Process Outsourcing is a structured arrangement between an organization and an outsourcing partner to perform services, otherwise conducted in-house. The provider of the outsourced services takes primary responsibility of ensuring the process works and delivers the required results as expected by the organization. Thus Business Process Outsourcing represents a new paradigm for international trade in services. In 1968, an Indian government working group on computers said, “Software development would seem to have a very high employment potential in a country like India … the value added in the case of software, is very large.” Ironically the same report framed a policy of “self-sufficiency” that arrested the development of the IT industry. Restrictive rules and regulations imposed severe restrictions on imports of hardware and software. Even IBM quit the country in 1978 due to laws that disallowed foreigners from owing more than 40% equity stake in an Indian firm. Sanity returned to the system only in 1986 with new policies which liberalized access to software and associated hardware. The software technology parks of the 1990’s led the way to opening newer technology domains such as Business Process Outsourcing agencies. India’s tryst with process outsourcing began in the mid 1990s with GE setting up a Business Process Outsourcing facility in Gurgaon. Some of the other early birds were companies such as American Express and British Airways. Initially low-end work such as data entry and call centre activity was outsourced to India. With increasing confidence of the companies, value added work such as processing of accounts and other non-core functions came to India. The success of these early pioneers encouraged a host of others to set up their own back office operations in India. Banks such as Citibank, HSBC and Standard Chartered and other companies such as Dell and Hewlett Packard set up their own captive operations. Indian software majors such as Infosys, Wipro and Satyam were a bit late to join the BPO party. The scene has since shifted to transaction processing.

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