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The world of Business Process Outsourcing (BPO) has evolved a lot from the time of its conception. It is still developing each and every day. And India and other low cost nations around the globe are grabbing its huge opportunities with both hands, fuelling phenomenal growth of their economies.
Business outsourcing, of course, didn't start in "low-cost" countries like India but originally grew out of IT outsourcing in what are considered "high-cost" countries like the United Kingdom.
The concept covers a huge array of internal company activities being performed by external companies. Many in the industry look almost nostalgically at the first, simple projects involving a single customer with a limited number of languages often being provided from customer premises. Early work in this area focused almost exclusively on finance and accounting processes. Beneath the veneer of flashy expressions like "procure to pay" and "order to cash," the traditional activities of accounts payable, accounts receivable, fixed-asset accounting and general ledger were performed.
Initially, many of the outsourcing deals involved staff transferring from the customer to the newly installed outsourcing provider. The business proposition at this time was that the BPO service provider would manage the process and people more efficiently than the company it served, and the company management would have greater time for critical business operations.
The BPO evolution
India is still the place for BPO but it's limited by being focused on English-language work. Those who believed that the BPO phenomenon only applied to companies with an Anglo-Saxon business mindset have been proven wrong. Increasingly, BPO is accepted as a standard business practice in Europe as well, and it is now found throughout the low-cost countries of Central and Eastern Europe (CEE) as well as the Iberian Peninsula. BPO in this area covers a range of languages. Initially, the demand was entirely for German and French, but has now evolved to include, for example, the Nordic languages, Dutch, Spanish and Italian.
The demand for local-language work in these low-cost countries remains small, but is a growth area. Until now, BPO work has covered customers' Western European subsidiaries and locations, but the latest trend is for the BPO service provider to cover the entire European market.
The evolution of BPO has impacted the scope of work performed. In addition to the historically popular finance and accounting work, much growth in the BPO space has occurred in order processing, HR services and procurement services. The work force has also changed, becoming more flexible and capable of implementing change. Internally, this is causing BPO service providers to develop specializations in recruiting and quality programs, which benefit the provider itself, the staff involved in these specializations and ultimately, the customer.
BPO service providers have also adjusted for external factors. One significant factor that has come from the United States is the focus on internal control environments and Sarbanes-Oxley Act (SOX) requirements relating to accounting oversight, auditor independence, corporate responsibility and enhanced financial disclosure.
Other than requiring external auditing of the BPO service providers specifically in the area of internal control, this has also raised greater customer awareness of how well managed its service provider is.
What is the impact of this evolution? The increased language and skill requirements mean that BPO players in the market continue to look at new channels of identifying appropriate staff. In part, this means cracking the notion that employees should all be university qualified, under 25 years of age and working a traditional working day. Staff diversity of and working environment flexibility are the answers.
Each of us is in the BPO space conducts an ongoing exercise to better match our customer requirements with our people needs. This is good news for people in the cities from where we deliver service, as the opportunities for employment are being offered to a wider audience.
Research by U.K.-based market analyst Datamonitor reveals the number of call center agents based in CEE servicing Western businesses' customers, will more than treble from 1,900 in 2004 to 6,400 in 2008.
International consulting, technology and outsourcing firm Accenture, which has been providing BPO services in Prague since 2001, has witnessed remarkable growth in this service to BPO locations in Bratislava, Slovakia, and Warsaw, Poland.
The evolution of BPO continues. The challenges and opportunities make this an exciting market segment to occupy. Ever so slowly, the great leaps forward in BPO will become wider known and the next time you hear about BPO, you will think of more than just India.
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