Business Process Outsourcing (BPO) is outsourcing of business functions generally performed by white collar and clerical employees to achieve various benefits such as cost savings, better quality and ability to focus on core competence....

Over the past decade or so, India has emerged as an attractive destination for offshore outsourcing. Companies all over the world are offshoring many different processes to India to harness the benefits offered by the country. Many Fortune 500 companies have either outsourced their processes to India or set up their own captive centers in the country, thus validating India’s value proposition for an offshore services hub.

The Information technology (IT) Outsourcing and Business Process Outsourcing (BPO) market in India is growing rapidly. According to the estimates of NASSCOM, Indian offshore IT and BPO market is worth USD 17.6 billion, which is about 44 percent of the total global IT and BPO offshoring market (about USD 40 billion).

Customer service is an important business process that firms carry out to ensure satisfaction and retention of their customers. Though it is a non-core activity of an organization, it helps in creating goodwill of the company since the company caters to the wants and needs of its customers. Customer service is a key parameter that differentiates a company from its competitors. Earlier, companies used to carry out customer service in-house, but due to benefits such as focus on core competency, cost savings, quality and flexibility, which are applicable for business process outsourcing as a whole, many companies are outsourcing customer services now.

Information Technology (IT) outsourcing is the outsourcing of information technology and systems operations to a suitable third party technology solutions provider. Companies outsource their IT development and management tasks to vendors to achieve benefits such as financial savings, technical capabilities and marketplace agility. The regular advantages of outsourcing such as focus on core competency, cost and quality are the driving factors for IT outsourcing as well.

This article details the basics behind outsourcing and outlines different outsourcing modes and also the advantages to outsourcing.