MSG Team's other articles

10794 How the Promised Utopia of Technology is Turning into a Perilous Dystopian Nightmare

What it was like during the Early Days of the Internet Boom when Utopia seemed Possible There is a general consensus among economists and management experts that technology leads to increased productivity, elimination of redundant barriers between the parties in a commercial exchange, enhances innovation and invention, and above all, contributes to the betterment of […]

11564 The Differences between Time and Material Billing and Fixed Cost Billing

Time and Material Billing Time and material billing refers to the billing process wherein actual number of hours worked and the resources deployed are billed on an as is basis with the margin added to it. In other words, time and material billing refers to the billing that is done as per the actual number […]

10095 The Kansas Experiment

In the year 2017, President Trump has promised the United States that he will provide unprecedented tax cuts to the people of the United States. He believes that such a tax system would stimulate economic growth and once again propel America to the pinnacle of economic success. However, he is not the only one to […]

9061 The Economics of Drug Prohibition

Drugs have been a moral menace to many societies for many years. Right from the time, the British East India Company corrupted an entire Chinese generation to the modern world where this epidemic is destroying South American nations, the curse of drugs is causing mayhem. This has led many governments in the past as well […]

11713 Understanding the Confidence Interval

The confidence interval is a central concept of hypothesis testing. Although understanding its mathematical and statistical meaning is beyond the scope of this module, one needs to have a fair idea of the concept. Hence, a brief introduction of the confidence interval that is essential for the Six Sigma project team to understand is as […]

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