Outsourcing soon to enter the public sector

The waves of offshore outsourcing have been hitting the commercial as well as public sector in many countries. Even though it has been relatively prominent in the commercial sector, it has started entering some limited zones in the public sector. The public sector has been in the need for services that will enhance efficiency and enable cost reduction. These perks have already been delivered by the BPO industry. Hence there is more temptation to outsource the public sector jobs to offshore locations.

The offshore outsourcing has already been used extensively in the US commercial sector particularly in Insurance and Financial sector. Kobayashi-Hillary, an advisor on globalization points out that the Australian, Philippines and Canadian government have been sending works to India. Even though the UK government has not directly outsourced the works, many offshore locations deliver parts of wider contracts, he says. It has been seen that the administration and data entry processes of a finance and accounting firm jointly owned by the UK department for health has been outsourced to India.Application development, application management and noncore administrative process like data entry jobs are largely outsourced to India. 

In the whole, the offshore market is expanding with the delivery model expanding into new territories to deliver to new geographical locations. With the introduction of cloud computing, where the end result is provided as a service over the internet, offshore outsourcing is no more a concern for many companies. As long as the service is delivered as expected, clients are not concerned about the location from which it comes.

Back office services are safe in BPO companies’ hands

 

Outsourcing of back office services have become one of the major sectors in the BPO industry. Basically companies rely on the BPO service providers for managing specific and not so crucial office tasks. Back office services outsourcing gained momentum with the newly emerged management trends and with the success of outsourcing in various other sectors. According to the field of services the back office works are being outsourced. Financial and accounting services, bookkeeping service, customer care and support, call center, email support, web research services are often given in the hands of BPO companies at various geographical locations.

As the BPO companies deliver efficient results, the field of services of back office operations is expanding. Hence many companies are seeking support from the outsourcing companies. The main advantage is that the outsourcing of back end operations reduces the working costs and help to achieve competence at reasonable prices. Since man power is available at lesser costs in the outsourcing locations, efficient services are ensured at low costs. This is reason why many multinational companies outsource their back office services to India. Moreover the companies can also save some quality time and utilize it for other process as they outsource less important work.        

As the offshore outsourcing companies have creative talent pools, they are efficient in delivering smart back office services using innovative business processing methods. Furthermore, certain operating methods are automated with software tools. In that way the BPO companies carry out the work by reduced man power and labor costs.

Rapid change sweeps over Finance BPO sector

The good news is that the number of finance BPO services being signed is increasing at a rapid rate of around 30% (Deloitte Consulting Outsourcing Advisory Services Analysis). And furthermore, the highlight of the advancement is that not only the FORTUNE 100 brands are holding the torch but the smaller companies have started moving down the path. Even though the growth has been expected, there are certain key factors contributing to the accelerating rate of finance BPO services.

Analysts suggest that the emergence of the middle market have contributed largely to the growth rate of finance BPO engagements. Strong bonds of contracts have been established as a result of increasing proportion of mid size projects taking place. The trend is expected to continue for the following years which would enhance the BPO sector. 

Now the second factor contributing to the success of the BPO sector can be the shift to on-sourcing and off shoring. Many large companies with a firm ground in the BPO sector have been adopting small scope establishments to enhance their sourcing mix. Moreover the rapidly growing off shoring industry has become a commodity and the operations are handed over to small scale service providers. 

Thirdly many companies have been adapting the volume based pricing in the way in which the finance BPO contracts are priced. Following the labor arbitrage in the sector, many service providers are moving towards gain sharing. This means the suppliers are pricing for the services based on variable inputs like transaction volumes. Also in this way, the provider gets the profit from the gains accumulated from the efficiencies achieved.

BPO insurance services: India to rule the roost

 

Initially the insurance companies have been more conservative in their attitude towards business process outsourcing. Particularly in offshore outsourcing, the insurance industry has been lagging behind. The main reason behind this hiccups were the myriad challenges arising from the intense competition, rising regulatory compliance and growing payouts due to scams and natural disasters. However, owing to competitive pressures the BPO insurance services will flourish in the coming years.

 The insurance industry is poised for significant growth in the next three to four years. The banking and financial services had been adapting the outsourcing services lately and insurance industry had also been in the scenario for some years. With expected cost savings and other significant advantages like focusing on core competencies and access to skilled labor, the insurance sector would soon set the foot firmly on business process outsourcing.

According to analysts, the Indian revenues from offshore insurance BPO services were expected to rise from $690 million in 2006 to about $2 billion by the end of 2010 (Valuenotes database). And this rise of income would in turn increase the employment rate from 41, 600 in 2006 to 100,500 in 2010. The BPO insurance industry is poised for higher growth than it has witnessed so far. This is mainly triggered by the need to reduce costs and differentiate products in an increasingly competitive environment.

A major part of the current offshore business in India is generated from insurance carriers in US and the rest comes from UK and Europe. The UK and Europe share are expected to increase thereby initiating business from the area. Moreover in India itself many of the domestic insurance companies have begun to outsource which would surely accelerate the competition globally.