Benefits Of Outsourcing To Host Country

Benefits Of Outsourcing To multitude CountryIn spite of the re centime global economic recession, the worldwide business outsourcing market has achieved tremendous growth, match to one of known International investment consultancy firm known as McKinsey Company predicts that the posit for outsourcing inspection and repairs pull up stakes obtain $230 million by in 2011 from whole worlds and it will grow and by 10.5 percent (compound annual growth rate.). In the authentic business world many enceinte organizations are outsourcing miscellaneous jobs for suit call focalise services, payroll, e-mail services, Business exercise Outsource and HR. As exampleHSBC Bank has outsourced their call centres and Electronic Data Processing at India and Sri Lanka.AVIVA Insurance outsourced their call centres at India and Sri Lanka.IBM has outsource business Transformation system and customer touch on work call centres at India1.1 OutsourcingOutsourcing can be defined as contact betwee n two companies to result services which might otherwise be performed by in-house employees. In todays world there is trend of outsourcing .Many multinational companies are now outsourced respective(a) level of jobs, as example much(prenominal) as call centre services, payroll forethought-mail service assistance. These outsourced jobs are sacrificeled by companies who have skilful labours who specialize to ply in services which are located outside the home terra firma.In today business world Outsourcings has become latest trend which is becoming more common in information technology field.1.2 Reasons for OutsourcingsThere are various reasons behind for outsourcings. Following section will describe the reasons for outsourcingImprove Goal CongruenceOutsourcing allow management to make attention on the vital or promptionateness business issues related with meeting customer pauperisms and maintaining day to day issues.Outsourcings Allow To Access World-Class CapabilitiesEach notation is specialization in their own core activities. Ex Qualitative labour-India. Advance technology-China and Japan. Outsourcing allow to access world-class capabilities, including innovative technology and so forthShare Risks With distinct PeoplesOutsourcing allows management spread certain level of risks as example demand vari capability and capital investments.Provider Free Resources for non core activitiesOutsourcing allowing organization to concentrate on non core activities and it allow to allocate those free resources among other activitiesReducing Cost By Economic Of ScaleOutsourcing allows organization to provide services at lower salute structure, which resulted from economies of scale. Reducing cost is the close persuasive reasons for outsourcing.Allow To Use Resources Not Internally AccessibleOutsourcing is most preferable opportunity for companies that have latent to speedy growth, expansion into a new geography line of business , or spin-offs . Outsourcing A llow to use Resources not internally accessibleAllow To Mange Functions Are Difficult attend problems are a one of major reason for outsourcing. However, managers have to find out underlying causes for difficulties rather than outsourcingEven though there are various reason behind for outsourcing , ability of obtaining cost advantages is The main objective of outsourcing is, barely lot of organizations are fail to realize any cost advantages received from outsourcing. The famous investment company Gartner is predictive that in 2009, 80% of organizations outsourced by having primary winding goal of coat cutting bit they are unable to achieve their primary goal of cost cutting, because there are various hidden cost of outsourcing. Such as outsourcing companies have high level of staff turn all over grade than other organizations ,Normally it is high as 80% 100%, cost of losing client due to increases of frustration. Therefore outsourcing must be fully monitored. Can easily fail.1 .3 Different Types of OutsourcingOutsourcing can be different type. Following section demonstrate the different types of outsourcing1. BPO Business Process OutsourcingBPO is the contact between two companies to handle business activities on behalf of another organization. The big companies in developing countries .such as USA, UK,Australian etc.., outsourcing their back office function to India to trace cost advantages and smell services.E.g.HSBC and IBM outsourced its employee payroll, data entry, voice calling activities to India2. LPO lawful wait on outsourcingLPO is the contact between two companies to process legal activities, such as patent application drafting, legal research and so forth.3. RPO Research Process Outsourcing.This is most famous outsourcing method in the biotech industry. Customers outsource their RD work to external parties. RPO also stands for Recruitment Process Outsourcing.4. HRO Human Resource Outsourcing.Human resources management found training, staffing, payroll management etc. These activities are outsourced by external companies that are located overseas.Ex In the US market, HRM outsourcing is a vast area. The amount of money envision for HR outsourcing is 29-30% of the total outsourcing5. MBPO Medical Business Process Outsourcing.2.0 Call meanss OutsourcingThe call centre industry comprises 80% of the total outsourcing industry in the world. that is why normally outsourcing refer and known as call centre outsourcing . A call centre outsourcing is that external party performs the part of a clients business which handling prognosticate calls. Outsourced call centre handle customer complaints over the telephone. Call centers actually start on as plain provider e-mail response and managing services. But in todays world outsourced has been spared in vast area. it cater huge areas ,such as providing technical support over the phone, handling customer relationships , ar tendment of travel services, , provide educational consultation , customer care assistance , financial services, and provide online business to customer supportTwo different words go unitedly with outsourcing, that is BPO and Call centre.Call centre can be stated as a BPO organisation. A Business Process Outsourcing (BPO) organization which is responsible for performing a process or a part of a process of another business organization.Call centres can be outsourced to following functionsCall canters can be divided up into major two partsInbound contact centre Inbound contact centre mainly encompasses customer oriented services such as provide customer assistance, sales inquiries assistance, troubleshooting solutions, and credit card process.Outbound call centre. An inbound call centre also implements customer services as surface(p) as it became live representative to provide extreme satisfaction to its customer and enhance the performance of the organization.3.0 Benefits 0f Outsourcing to The Host CountryThis section will discu ssed Benefits of outsourcing call centers to the armament country. Current trend in the call centre outsource market is the Asian countries. That is lot of call centers are located in Asian Countries such as India, China, Sri Lanka, Thailand, Philippine, and so forth. in outsourced market, India is the market allow forer in the international outsourced by grabbing big market share which is more than 80 %.this is basically due to its well fluent English speaking skilled workforce and low level of net range when compare to developed countries salary range. India salary range is 80% lower than developing countries like USA, UK and so forth .Other feasible locations for off shoring up in Asia include China and the Philippines, Sri Lanka .this will gain flesh out by using diagram Figure 1HSBC has one future plan to open wholly owned BPO subsidiary known as HSBC Electronic Data Centre in Kolkata, India,which forecated to employed 2,000 staff working on back-office operations,HSBC ha s another BPO at Naina Lal Kidwai India, , has employ 2,000 staffHSBC is spreading the network of processing centers by opening a new business process outsourcing centre in Sri Lanka to provide data processing and customer service facilities for the banks global operations. The new centre at capital of Sri LankaAviva has plan improve 5,000 interlocking opportunities in relation to business process outsource (BPO) services in India and Sri LankaFigure 1 Distribution of Outsourcing OperationIs outsourcing preferred or undesirable? It is still debatable. Outsourcing provides various benefits to the home countries which is business is undertakings as well as the country where services are being or will be provided (Host Country).This assignment is basically based on outsource call centre in India. India is one of the worlds crowning providers of call center services .India is the most favored IT/BPO destination of the world. There are lots of the big MNCs all over the world are inter ested in outsourcing their operations in India.This notify will discuss the benefits of outsourcing to host country. To develop this report India is consider as home countryWhy India is selected for outsourcing? The answer is very straight forward. India is full with large skillful labour forces. India produces the largest number of graduates in the world. This behave to improve skilled labour forces in India.Call center Outsourcing offers many advantages to the country where the services are being provided can be discuss as follows1. Improve Economic Growth of Host CountryCall centre Outsourcing brings cost advantages and increase in profits in macroeconomic terms to both home countries which business undertakings as well as host country benefits in various aspects. During withstand few years India has achieved tremendous growth rate by contributing services of off shoring. According to market research, India has been benefited extremely from growth in this outsorcing area and t he rate of growth is above the expectation level. In the fiscal year that ended March 2010, Indias IT industry and outsourcing call centre revenue was $16 billion, and $8.5 billion of this was from Call centre Outsourcing services.According to market research ,It is forecasted that the countrys IT related services and call centre Outsourcing services exports will reach $30 billion by 2011 .Market research conduct on outsourcing predicted that the global call centre outsourced services will encounter for revenues of US$1.2 trillion by 2011. Finally, providing outsourcing services will lead to improve Economic growth of host country and Indian gross domestic product can be expected to grow at 8.5 +/- 0.25 per cent (in fiscal year 2010/11). Share of call centre outsourcing from total exports can be graphically shown as followsFigure 2 contribution of outsourcing to Indian Exports2. strangle Unemployment and Create New Employment OpportunitiesOutsourcing services will be the good sign for national unemployment in India. service off shoring will lead to expand employment opportunities in developing countries like India. India has pawed the way for a significant number of jobs In terms of growth in off shoring area. According to market research and statistic Call centre outsources are projected to increases employment level up to 1.1 million by 2011 and 3.3 million by 2015 and in the tele parley industry alone, it is forecasted that straight job creation is reach 2.2 million by 2011 as well as outsourcing will create a further 3 jobs which are not core related to outsourcing as well as Reduce unemployment and create new employment opportunities. It can be shown as follows Figure 3Figure 3 Unemployment Rate vs. GDP Growth RateExampleHSBC is off shoring processing looks locations which enables to obtain work with lower cost ,to provide low cost qualitative services to Asian countries .in Asian news paper it indicate that in developed countries. These locations take o n work such as data processing and customer service, but also internal software engineering at Pune, Hyderabad (India), Vishakhapatnam (India), Kolkata (India) , and 65,000 people were working in the call centers over the next two yearsEven though outsourcing is great solution for unemployment it has some negative impacts. Outsourcing is a management tool that has a great amount of emotions. Upon hearing about outsourcing, majority of the employees fear that they will lose their job. Like any other managing change in an organisation, workers resist and hate the impression of outsourcing. In both cases of off-shoring and outsourcing, in the short term, there are risks of job losses, but the gains from relocation could lead to the creation of new jobs and outsourcing is a great opportunity for the employees to get a better training, development and career opportunities.3. Women are equally treated in providing Job OpportunitiesOutsourcing will provide equal job opportunities to women in India. The ability to complete far-off locations job that located very closer to their town lead to improve womens employment level. This is the one of major motivation factor which provides guess more female to enter the off shoring employment. For women, the unemployment rate has trended slightly downward over last few years, while the jobless rate has go quickly. Figure 3-Unemployement Rate of women.This indicates that more women have entered the labor force during last few years. This factor has directly link to the employments opportunities created by outsourcing call centres in India.ExampleAccording to market research, which indicates that 49 %of Wipros (a large Indian off shoring company) workforce is female, while ICICI OneSources workforce is 60 percent female . This will indirectly lead to improve employment level their earning capacityFigure 4 Unemployment of Women5. Outsourcing provide motivation for EducationOne of major reason for outsourced manufacturing is cos t .that is basically outsourcing relies on a basis for cheap, but with well educated and highly skilled workforce. The highly skilled labours are created from well naturalized education process. In India the salary level provided by employees who are working in the outsourced companies are above the industry average range of salary. On other hand this type of employment can be considered as more respectable job. So all these factors lead to motivation to be part of outsourced company. so become employer of company potential candidates should have sufficient level of skilled including fluency of English. In a nutshell Outsourcing provide motivation for Education6. Host country Consumers get Advantages of Quality of ServicesSome time The call centres being provide same services to host country local customersExIndia as well as home country customers ExUS market .as a results host country customers enjoyed by getting qualitative services which are normally served to developing count ies.ExampleIn 2009 HSBC established call-centre in Sri Lnaka which providing same services to host country local customers ExSri Lanka as well as home country customers7. Transfer of Advance Technology to Host CountryOutsourcing call centres will lead to transfer Technology and knowledge to home country. Outsourcing requires appropriate technical sophistication. For example, it is essential to have reliable and inexpensive communication links with the rest of the world when doing outsourcing. Host country can get massive advantages from latest technology in short term as well as long term. There is no limitation to transfer technical knowledge.8. Improvements in Human AssetExport-oriented field have been shown to get better the quality of human Asset .outsourcing lead to Improvements in Human Asset9. The Outsourcing processes is more environmentally friendlyOutsourcing does not lead to adverse negative externalities, such as environmental pollution and labour expropriation. The imp act of this type of negative environmental externalities is normally at ignorable level. Because it is very difficult to calculate these negative impact to the family and environment. Because the actual consequences which exposed to the world after a long period of time.10. Rapid Expansion of the Services SectorThe amount of employment level in service sector is about 30% , Based on marketing research, in developing countries, , 83% of the US employments market is non-farmers who are employment in services sector, There is high tendency to the growth of jobs in the services sector .it is estimated that in USA market more than 97% of the jobs created are service related jobs during the 20124.0 CONCLUSIONIn conclusion, Outsourcing has positive impact on both Host country and Home Country as well. Outsourcing Call centre helps multinational companies like HSBC, AVIVA, IFS and etc. to create a higher value at a lower cost through getting location advantages and low salary rate skilful labour.Host Country will be benefited by transmitting latest technology, global training for the employees, creation of massive job opportunities and quick growth in GDP. On the other hand The benefit arrived for home country due to outsourcing is , people who live in home country need to less amount of money to purchase well qualitative goods and services, this lead to improve greater savings in home country which finally affect positively in home countrys economyIn particularly while host country is being getting advantages of the outsourcing at the same time the employees in the home country will be affected by the facts of unemployment. Because outsourcing the jobs have possibility to lose. The developing countries like India , Sri lanka get benefited because of outsourcing , but in other hand the people in the first world nations will suffer from unemployment. Even though it improve unemployment level of economy of home country, it positively affect on home countrys economy by improving GDP. Then this leads to improve productivity on global economy.Outsourcing is a one of the latest and successful management strategy that has a huge amount of advantages. Lot of the employees are in under pressure .because they have fear of losing their job because of Outsourcing. Therefore employees dont like to engage with this concept even if there are many advantages exist to all parties.