MSG Team's other articles

12047 Working Capital Management – Cash, Inventory and Account Receivables

Introduction Businesses require adequate capital to succeed in business environment. There are two types of capital required by business; fixed capital and working capital. Businesses require investment in asset, which has to be utilized over a longer period of times. These long-term investments are considered as fixed capital, e.g. plant, machinery, etc. Another type of […]

9047 What is Ease of Business rankings and why do they matter to countries like India?

The Recently Published Ease of Business Rankings The news that India jumped 30 places in the Ease of Business Rankings as published by the World Bank and which covers 190 countries worldwide was met with jubilation and chest thumping by the Indian Government, which promptly announced that the Indian Economy was on a path to […]

10869 The Quantitative Approach for e-Strategy – Seven Dimensions of e-Commerce

Introduction The way business or commerce gets conducted has undergone a great deal of change due to the advent of information and communication revolution. In the last two decades or so there has been a phenomenal growth in e-commerce. Electronic commerce or e-commerce consists of buying selling and auction of various products and services through […]

10199 Looking beyond BRICS for the Next Economic Hotspots

Looking Beyond BRICS: The MINT Grouping The BRICS or the acronym given to the grouping of Brazil, Russia, India, China, and South Africa in so far as promising economic growth is concerned, has now reached a stage where global investors are on the lookout for the next emerging economic hotspots. Indeed, for much of the […]

8871 What Explains the Decline of the Left in India and its Resurgence in the United States?

Why the Left in India is facing an Existential Crisis? The recently concluded General Elections in India all but cemented the emergence of the Right and the Centre Right while eclipsing the Left that has now been pushed into irrelevance. Indeed, as the Modi 2.0 government settles into its Second Term, chances are that the […]

Search with tags

  • No tags available.

In previous articles, we looked at how the BPO phenomenon has played itself out in India and other Asian countries that have derived humungous benefits to their economies. In this article, we look at the other side of the coin i.e. the benefits that accrue to the economies of the Western countries as they outsource their business operations and back office work. First, . This is because of the fact that the wage differential between the West and the East makes it possible to cut costs by as much as half when the same work can be done in India and other Asian countries for a fraction of what it costs in the United States or Europe.

Next, BPO allows the companies in the west to concentrate on higher end value adding work and makes them focus on their core competencies.

The point here is that by outsourcing their routine and mundane work, the companies in the west have more time and resources to focus on doing work that is higher up the value chain and hence add substantial value to their businesses.

This fact has been highlighted by many commentators in the West who urge the business leaders and politicians in the US and Europe to look at this aspect before they raise a hue and cry over outsourcing. Given the fact that most of the work that is outsourced brings cost advantage coupled with a focus on core competencies because of the less overheads, this is a double whammy benefit that few companies in the US and Europe can ignore.

Third, BPO as a phenomenon has resulted in productivity leaps and better ways of doing the back office work by firms in India and other countries of Asia. This is because of the fact that these firms have perfected the art and science of back office work and are now moving up the productivity curve which means that companies that outsource can be assured of quality with cost. Indeed, this trend of delivering high quality work at half the cost has meant that companies in the West are embracing BPO wholeheartedly. This explains the surge in the number of companies that have jumped on the BPO bandwagon.

Finally, in these recessionary times, any cost savings is welcome and BPO offers the recession hit companies in the West a foolproof way of increasing their profitability and margins. Companies can either grow by boosting their revenues or cutting costs or both. During times of economic downturn, it is often the case that companies look to cut costs as increasing revenues becomes difficult due to the gloomy economic conditions. Hence, the natural and obvious choice for such an endeavor would be to outsource their back office work to companies in India and other Asian countries.

In conclusion, BPO represents a win-win situation for the companies that outsource their work and for the firms that are vendors and partners. Hence, it is the case that the BPO phenomenon has resulted in net gains for both parties in the exchange.

Article Written by

MSG Team

An insightful writer passionate about sharing expertise, trends, and tips, dedicated to inspiring and informing readers through engaging and thoughtful content.

Leave a reply

Your email address will not be published. Required fields are marked *

Related Articles

Challenges Faced by BPO Firms in India

MSG Team

Effect of Domestic Politics on Business Process Outsourcing (BPO)

MSG Team

The Drivers of the BPO Phenomenon: Globalization, Economics and Geopolitics

MSG Team