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Entries from January 8th, 2008

Business process outsourcing (BPO) and education

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Educational attainment is one of the primary drivers of the global outsourcing trend. For years it has been common knowledge that foreign K–12 education is superior to that offered in the United States. High school graduates In European and Asian countries notoriously outperformed their U.S. counterparts on basic knowledge tests, especially those covering universal topics [...]

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Business process outsourcing (BPO) and global economics

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From an economic perspective, outsourcing service jobs to offshore labor markets makes obvious sense. Of the approximately $1.45 to $147 of value derived from every dollar spent offshore, U.S. firms receive $1.12 to $1.14, while foreign firms receive only $0.33 of the value. Moreover, if income taxes paid by H1-B visa holders, and software and [...]

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Business process outsourcing (BPO) and global workers

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We have been through this situation before. Outsourcing jobs to low-cost, usually foreign, labor markets is a familiar strategy in manufacturing. When the U.S. automobile industry turned to outsourcing to reduce the costs of producing an automobile, a great hue and dry went up to reverse the trend. Nevertheless, on further analysis, it became clear [...]

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Business process outsourcing (BPO) and politics

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The election year of 2004 is shaping up to be one of many issues, with jobs and their apparent flight to offshore labor markets one of the central ones. Both major political parties have staked out positions on the issue in a manner that is in line with their overall economic platforms. Democrats stand in [...]

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Force majeure risks

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Force majeure risks are the most difficult to quantify and specify. What is the likelihood of a war? A hurricane? An earthquake? No one really knows. Yet these risks can be estimated with some measure of objectivity, and an appropriate mitigation strategy can be developed and enacted. Geopolitical realities around the world today have brought [...]

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Global business environment

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Outsourcing, and most notably offshoring, has leapt into the consciousness of Americans, producing both entrepreneurial zeal and protectionist backlash. Dire predictions of the demise of U.S. global competitiveness are balanced by enthusiastic invocations of Schumpeter’s “creative destruction” theory and the proven ability of the U.S. economy to recover from whatever shocks might come its way. [...]

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Business process outsourcing (BPO): Strategy and competitiveness

No Comments · Business outsourcing

Experience has amply demonstrated that the early stages of most business revolutions are periods of great innovation, great progress, and great pain. The total quality management (TQM) movement in the United States, for instance, was characterized by long-overdue advances in manufacturing processes. Ford Motor Company adopted the “Quality is Job 1” mantra in the early [...]

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Value risks

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Whether the rationale is cost savings or business transformation, an outsourcing project is undertaken to create value for the business process outsourcing (BPO) buyer. With the myriad uncertainties inherent in any complex BPO deal, extracting anticipated value can be a challenge. This risk can be mitigated through several techniques, most of which center on managing [...]

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Vendor organizational risks

No Comments · Business outsourcing

The risks associated with the BPO vendor’s organization are perhaps the most difficult to accept because they are not easy to control. This risk is also enhanced when the vendor is offshore. The risks associated with the vendor organization can range from business practices to authenticity of certification and reference claims. Vendor business practices can [...]

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Legal risks

No Comments · Business outsourcing

Legal risks associated with offshore outsourcing are legion, and their threat is made worse by the relative lack of legal precedent. For instance, there currently are no clear legal rules governing the extent to which remedies can be extracted from a business process outsourcing (BPO) vendor in the case of a security breach on other [...]

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