Welcome to the world of global back-office operations, or as it is often called, cross-border business-process outsourcing. While companies have long outsourced manufacturing operations and other tasks such as IT maintenance or software development, the trend has now expanded to include other kinds of business processes such as customer contact, bill processing and medical transcription. Companies are moving such work to locations in India, the Philippines and Jamaica, arguing that they can cut costs by 20% to 40%. As a result, cross-border business process outsourcing has grown into a massive market. Consulting firm Gartner estimates that cross-border business process outsourcing will grow into a $178.5 billion business by 2005 from $123.6 billion in 2001.
Knowledge@Wharton presents a two-part special report examining this phenomenon. In the first part, we look at the pros and cons of business process outsourcing arrangements, examine some human resources issues, and also present some findings from a Wharton research project led by professors Ravi Aron and Jitendra Singh. The second part explores management and financial issues in BPO transactions.
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