BPO is a Growing Business

To the average person, the word outsourcing is an evil corporate tool that has stolen American jobs. Outsourcing is actually much more complicated than that. In most cases, outsourcing does result in jobs moving from more expensive western industrialized nations to countries with growing economies. The profits generated by the parent corporation are reinvested back into its own business, allowing for expansion, innovation, and even charitable contributions to the local community. It also results in higher payoffs to shareholders, who also spend their profits in their own localities. Another thing to remember is that American companies actually own and run some of the outsourcing centers. Marlabs is one such example, with a headquarters in the US and several business process outsourcing centers in India.

In the case of Business process outsourcing, or BPO, the goal isn’t just saving money on staffing. Companies hire BPO services to take care of business functions that have nothing to do with their primary business. Part of doing business is having to handle accounting, human resources , even customer or tech support, whether that is the primary focus of the parent company or not. They expend not only money in salaries, but in monitoring and auditing and attempting to improve processes that have little to do with their core business. By using a BPO company, they are able to return their energies and resources to their core focus. Since business processes are the core of BPOs, the resulting services are not only less expensive, they are more efficient and of higher quality. The BPO focuses on providing excellent business services and constantly improving them.

There are two different types of BPO services. Offshore outsourcing happens when a company uses a BPO service in a different company. Nearshore outsourcing usually takes place in a neighboring country, or one that is in the immediate neighborhood of the contracting company. Believe it or not, there are US companies that outsource to Canada or Mexico, not just India.

India is the world’s leading location for outsourcing. Offshore BPO now generates over $30 billion (USD) for India. It accounts for over 60% of the offshore BPO in the world. At one point they held 70%, but countries like South Africa, the Philippines, and China have begun to make inroads in their dominance. Overall, the global BPO market is worth between $122 – $154 billion (USD). Retail banking and insurance account for over half that business with hospitality/travel and auto services accounting for another 20% combined. Other industries taking advantage of services offered by Marlabs and other BPO providers are telecoms, pharmaceutical, finance, human resources, and accounting as well as “others.” As of 2006, only 8% of that addressable market was being serviced, leaving considerable room for the industry to grow.