16 Sep How Business Process Outsourcing (BPO) is helping different Industries
Outsourcing business processes have multiple benefits starting from reduction in cost to enhanced production with increased efficiency. Nowadays most companies, small and medium enterprises, and growing startups outsource their various departments to deliver a better customer experience and focus on core business activities. It undoubtedly helps companies to ease out processes they do not have expertise in, putting their customers in safe and skilled hands making ensure that there are no underlying gaps in the process.
Today there is not a single sector left which does not outsource its work. The example set by the IT sector in outsourcing its work have followed by other departments as well such as law, healthcare, manufacturing, automotive, travel & hospitality, accounting, insurance and telecom sector in outsourcing their business operations. These industries now outsource their business activities both onshore and offshore. Let’s discuss the important industries one by one which is employing the power of business process outsourcing.
The global healthcare industry has shown a massive industry in outsourcing its business operations to reduce cost and still make sure to provide quality healthcare services. Earlier, the industry was limited to outsource only medical data entry and medical transcription. But with the growing awareness that outsourcing has numerous advantages, the industry started outsourcing its other departments as well like management system, health billing, clinical research, and Big Data to keep the data secure and safe. After outsourcing these activities, the healthcare industry has experienced numerous benefits such as critical mistakes are avoided, access to skilled and trained professionals, quality patient care, reduced training cost and increase in business efficiency.
There are many manufacturing and retail industries which outsource their certain business functions to get better results in a short time, with China being the primary source of overseas manufacturing. Apple, Addidas, Walmart, Nike, and First Solar are among the ones that have selected third-party vendors in China to fulfill the demands of their consumers. There are many pros that why these companies decided to move third-party companies. The labor is quite cheap. Yes, you read it right. There are many reasons that why labor in China is cheaper. China is a country with the massive population and so does the workforce is. This gives an opportunity for employees to compete against the selected position and give some advantage over others. Many multinational companies
Let’s take an example of Chinese manufacturing firm Foxconn in China, that provides cheaper, efficient and skilled labor. Apple’s relationship with Faxonn is well known. The Cupertino giant – Apple has been known for manufacturing its iPads, iPhones and other popular products in China at a reasonable price. Even the company has been criticized multiple times for manufacturing its core products overseas than at home. However, Apple itself confessed that there is a shortage of skilled and professional labor in the US that led the company to outsource its manufacturing processes.
Outsourcing is gaining a remarkable place in the telecom market as most of the telecom companies now prefer to outsource their non-core business operation. The effort aims to deal with a tight budget, limited resources and above all to get the best results with minimum investment. A very recent example is RCOM that signed a $2 billion contract with Sweden’s Ericsson and France’s Alcatel-Lucent to outsource its pan-India network management operations to optimize resources and save costs.
The telecommunication industry is employing outsourcing in many ways, it most likely depends on the size of the company. Smaller companies in the telecom sector mostly use the power of outsourcing to carry out their strategic operations which lead to cut the cost to compete with the most established industries in the market. Outsourcing allows these companies to reduce labor cost and utilize these funds for product development to win the trust of consumers and make their mark in the international market. On the other hand, large size companies are in more immediate need of outsourcing, they highlight a big source of finance for foreign IT and data center businesses. The difference is larger companies outsource to establish their place in the foreign markets while smaller companies are more inclined to save cost.
IT outsourcing is probably more complicated than other types of outsourcing. Focussing purely on cost is just not enough. Organizations need to take all three drivers – cost, strategy, and risk into consideration while outsourcing IT operations. IT services such as cloud computing and its sub-departments, such as Software as a Service (SaaS), are considered to be part of the core service of IT outsourcing. An organization can outsource IT functions ranging from infrastructure to software management, quality assurance, app development and maintenance, and tech support.
For example, a company might outsource its IT management functions because contacting a third-party vendor is it is cheaper rather than hiring its own in-house IT management team. Most large enterprises only outsource a portion of any given IT function while other outsource their entire department.
The automotive industry has been active consumers for a very long time of outsourcing services. Globally, China and India are regarded as regions with huge growth potentials for the outsourcing market. This can be attributed to many reasons like the growing infrastructure of the countries and the availability of skilled and professional workforce. Several automotive manufacturing companies have set up assembly and production plants in China and India to decrease the cost and also stay competitive in the market.
The primary factors that allow the outsourcing of the automotive sector is low cost, skilled labor force, business efficiency, and increased production rate.