Business Process Outsourcing:Challenges and Opportunities

BPO is a heterogeneous and rapidly growing offshore market with a projected annual growth rate of 60 percent (Tapper, 2004). Brown and Stone (2004) reported that BPO accounted for 34 percent of the global outsourcing contract value in 2004 and projected that BPO services would grow from $1.3 billion in 2002 to $4.3 billion in 2007. The growing number of global contracts and alliances focusing on BPO service delivery clearly demonstrate the organizations' beliefs in the BPO value-propositions. BPO suppliers not only help reduce clients' costs, but also provide expertise, help improve clients' services, and increase clients' profits. Client and vendor organizations seeking to exploit the benefits of a BPO relationship need to mutually understand their goals, values, and capabilities before entering into an outsourcing partnership.

Business Process Outsourcing (BPO) industry is of significance to India owing to its role in generating foreign exchange and providing employment to the educated youths of the nation. The BPO industry in India has been established only over the last 10 yrs. But the same is being touted as a magic wand which has contributed significantly towards warding off unemployment for thousands of young graduate. However, there is concern regarding issues of health and services that are unique to this new and developing industry. Further BPO sector has been ranked high for attrition rate on account of stress factors, work pressures and health reasons.

Through this paper, focus is placed on the following three points:

(1) the unique managerial challenges of BPO companies in India;

(2) the issues perceived as most critical by the management and employees and

(3) the opportunities for BPO firms in coming future.