Business Process Outsourcing
A MCQ has been asked in AFA LDCE 2024 Exam - BPO stands for _________
What is BPO ?
Business Process Outsourcing (BPO) is the practice of contracting specific business tasks or processes to a third-party service provider.
These tasks typically include non-core activities such as customer service, IT support, data entry, accounting, and payroll management.
BPO helps organisations reduce costs, improve efficiency, and focus on core business activities by outsourcing repetitive or specialised tasks to external experts.
BPO can be domestic (within the same country) or offshore (to another country).
Types:
Back-Office Outsourcing: Administrative tasks such as Accounting, HR, Customer support, and IT services.
Front-Office Outsourcing: Customer-facing functions like Sales, Marketing, and Technical support.
KPO - Knowledge Process Outsourcing: High-value knowledge intensive tasks such as Research, analytics, and engineering.
Advantages:
Cost reduction: Operational costs will be reduced by leveraging lower labour costs in other countries.
Scalability: BPO providers can quickly scale up or down their services to meet fluctuating business needs according to the demand.
Expertise: Allows firms to access specialised expertise and resources that they may not have in-house.
Focus: Focus on Core competencies by outsourcing non-core functions such as accounting, Sales, Marketing, HR etc.
Challenges:
Communication barriers: Cultural differences and language barriers can sometimes hinder effective communication between the client and the BPO provider.
Data Security concerns: Concerns of sensitive data at BPOs.
Vendor Management: Managing multiple BPOs for various operations can be complex and time-consuming.
Conclusion: BPO has been best suitable for industries like IT, Finance, Healthcare, and Telecommunications. By effectively outsourcing non-core functions, firms can improve their efficiency, reduce costs, and focus on their core business activities.
List of prominent BPOs in India, serving a variety of sectors globally:
TCS: Tata Consultancy Services (TCS)
Infosys BPM (Business Process Management)
Wipro BPS (Business Process Services)
Genpact (a GE Business unit)
HCL Technologies BPO Services
Tech Mahindra Business Services
Cognizant Technology Solutions
Indian Railways and BPO:
Indian Railways has been exploring various avenues to outsource its non-core activities to the BPOs. Some of the Non-core activities are:
Ticketing and reservations
Call centres and customer support
Back-office operations (e.g., HR, payroll processing)
IT and administrative task
Is it Privatization or Outsourcing in Indian Railways ?
The Railways has around 13 lakh permanent employees and over 4.5 lakh contractual and outsourced staff. It shows a ratio of 3:1. May be in coming days, this ratio may be jump to 2:1
Activities (termed as Non Core) that are already outsourced on a phased manner in Indian Railways are :
AC Coach attendants
Platform cleaning
Security
Executing the works in Indian Railways
P.Way maintenance
Catering & Pantry car
Hospitality
Doctors in Railway Hospital
Supply of Bed linen in AC Coaches
OBHS – On Board Housekeeping Services
Parcel vans
Sanitation in Railway colonies
Managing Retiring Rooms Dormitories
Housekeeping of Railway Stations
Railtel for telecom operations
RVNL for construction activities
Disburse salaries through NEFT (thereby reducing the Cash office staff)
Doorstep Banking
Engineering Surveys
Painting or removal of paint of Rolling Stock in Production Units / Workshops
Maintenance of IVRS – Interactive Voice Response System
Transportation of released track material
Leasing of SLR space
Unscheduled and scheduled repairs of house wiring and operations of Pumps/DG sets / Stationery AC Plants/ Distribution network of power supply
Unscheduled repair of major electrical assembly of locomotives / multiple units / Alternator / fans / Compressor in AC Coaches
Waiting halls in Platforms
Proposed / Contemplated activities are
PMC – Project Management Consultancy – Supervising the Works
Corporatisation of Railway Production Units and Workshops
Corporatisation of all construction activities
Railway Station operations (as a whole)
EPC – Engineering , Procurement and Construction (from estimate stage to completion stage)
Certain activities of Salary preparation, maintenance of Provident Fund / NPS etc
· Private Trains
The above list is endless. I advise Railway employees to face any eventuality of the rapid changes in the Indian Railways in coming days.
Note:
The author neither supports nor opposes the privatisation of non-core activities in Indian Railways.
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