The value of Business Process Outsourcing services, and particularly offshoring, is illustrated by the rapid growth of this industry. Most people agree that the entrepreneurial opportunity in scale-plays such as all centers is over. One of the commonly-accepted themes on where BPO startups will go next is “Niche BPO” — to pick highly specialized processes (such as legal work) and outsource pieces of that. There are a couple of other interesting areas that I would like to offer.
First, the BPO value has been delivered to a very select set of customers so far. Practically, the Fortune 1000 of the world. What are the models that will enable BPO services to other segments — be it on size, sector or geography. This is not just a sales focus issue — it might entail new business models, right from sales to delivery. It might require to integrate technology and BPO like never before. For example, there are already some companies which are looking to service Small and Mid sized Businesses (SMB) using innovative approaches, while reducing both the sales and delivery costs. The early starters in this area seem to have not figured out the scale and value-add issues (some of them resemble staffing companies), but more innovation is to follow.
Second, the labour cost arbitrage has largely been used for introducing efficiency in to existing businesses. Another question is important — what new businesses are enabled by supply of low cost labour? Are there products and services which could not be delivered at old costs in local markets, but are now possible. Take an example of availability of broad market research on private companies.
BPO has a long way to go. And there are a lot of roads ahead.
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