Disadvantages of the BPO Phenomenon

In previous articles, we looked at the humungous benefits that the BPO phenomenon brings to the economies of the host and the target nations. Mainly, we focused on how cost savings for the companies outsourcing their back office work and increased revenues for the companies doing the outsourced work have been actualized leading to a win-win situation for both parties.

However, the BPO story is not all milk and honey and as we shall see there are many obvious and hidden disadvantages that have affected both the parties to the exchange.

For instance, in the countries like India and Philippines that do a bulk of the outsourced work, the BPO sector is known for rising incidence of lifestyle and work related illnesses mainly due to the fact that the employees in the BPO sector work at nights because of the time zone differential. Ironically, what is the USP or the Unique Selling Proposition for the BPO sector that they can provide 24/7 work to their clients in the US and Europe has turned into a nightmare (no pun intended) for the employees.

Next, the fact that many of the companies are yet to move into higher value adding activities has meant that their energies are wasted on doing repetitive and low end work which drains away the advantage given the fact that any business model based on cost alone cannot be sustained over the longer term.

The point here is that the BPO sector unless and until it manages to move up the value chain will always be under threat from newer lower cost rivals. The third disadvantage is that many customers in the West are increasingly being suspicious of Asians handling their complaints and these negative feedbacks are not restricted to racial and prejudicial undertones but also cover legitimate concerns about security and communicative aspects as well.

The point here is that many customers in the West are increasingly feeling uneasy given the spate of scandals that involved leaking of customer data along with misinterpretation and misunderstanding between the customers and the back office personnel.

Finally, the BPO phenomenon has created an illusion of prosperity and higher standard of living for the employees and this means that countries like India have to contend with a large workforce that ape the West without having the infrastructure or the amenities that the West enjoys. This aspect brings to the fore the fact that blindly aspiring to Western lifestyles without going through the stages of development that the West went through means that one cannot just leapfrog into advanced economy status without doing the basics right.

This has especially manifested itself in another aspect that has to do with the difference in compensation between the BPO employees and the other sections of the economy leading to social tensions etc. These are some of the disadvantages that the BPO phenomenon has brought to the fore in both the economies of the West and in Asia.

In conclusion, as with any sector, the industry leaders in the BPO sector have to ensure that there are more benefits than drawbacks for the sector to flourish and benefit the economy as a whole and at the same time provide benefits to their clients.