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Entries Tagged as 'Business outsourcing'

Business process outsourcing (BPO) and education

93 Comments · Business outsourcing

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 such as science, mathematics, literature, and world history.

U.S. education analysts have long lamented the gap between U.S. high schoolers and their international peers, but they could always bask in the superiority of American higher education.

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Business process outsourcing (BPO) and global economics

278 Comments · Business outsourcing

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 service imports by India are considered, outsourcing provides an aggregate benefit to the U.S. economy of $ 16.8 billion.

The global economy has suffered potent shocks over the past decade: the collapse of the Japanese, Mexican, and Russian economies; the unbelievable rise and fall of the Internet economy in the United States; and the rise of terrorism that threatens nearly everyone.

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Business process outsourcing (BPO) and global workers

86 Comments · Business outsourcing

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 to economists and social analysts that outsourcing some labor to offshore destinations actually helped preserve American jobs.

As MIT economist Lester Thurow put it at the time, “Either half the car is produced in Detroit and the other half in Mexico; or the whole car is produced in Japan.

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Business process outsourcing (BPO) and politics

41 Comments · Business outsourcing

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 favor of some type of regulation, although most are staunchly opposed to anything that smacks of overt protectionism.

Republicans defend free trade and hail the unimpeded flow (if goods and services around the world. They favor allowing the short-term pain to subside before leaping to any policy decisions with respect to outsourcing.

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Force majeure risks

386 Comments · Business outsourcing

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 the threat of war to nearly every doorstep.

At the same time, reasonable assessments of the probability of war affecting a BPO vendor can be made.

Business Monitor International provides extensive coverage of the political, economic, and military risks that exist for countries around the world.

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Global business environment

1,516 Comments · Business outsourcing

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.

The Wall Street Journal’s Daniel Henninger calls “the global migration of human labor” the “most powerful force on the globe today.

The New York Times’ Thomas Freidman has adopted outsourcing as a personal cause célèbre, authoring more than a month’s worth of weekly columns defending and endorsing the offshore outsourcing phenomenon.

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Business process outsourcing (BPO): Strategy and competitiveness

49 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 l980s after superior-quality products from foreign automakers had already seriously eroded its domestic and international market share.

The NBC news program “Quality on Else” and the subsequent book of the same title lit a fine under American managers and business school educators, ushering in sweeping changes in business processes and educational curricula.

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Value risks

168 Comments · Business outsourcing

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 the projected outcomes.

For instance, if the outsourcing deal is expected to save the BPO buyer $1 million during the first year, the project management team (PMT) should manage to that figure.

Adding additional people or hiring consulting firms may be a temptation as project difficulties mount.

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Vendor organizational risks

2,437 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 vary greatly around the world. Practices that are clearly prohibited or considered highly questionable in the United States can be routine in the vendor’s home country.

The problems of bribes, kickbacks, on money exchanged under the table have affected U.S. businesses abroad in a wide range of industries.

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Legal risks

168 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 gross malfeasance. Countries differ in their laws for foreign firms seeking damages from private enterprises.

This governing document provides a framework for the buyer-vendor relationship. Today, many law firms and, consultancies specialize in assisting BPO buyers in developing contract terms that are favorable and enforceable.

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