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Business Process Outsourcing -What Americans Need Know

Business Process Out Sourcing, jobs,Revenue


Abraham Lincoln must be chuckling in his grave to see the predicament being faced by George Bush, for unwittingly under the guise of free trade he has reopened the slave trade, albeit with a difference- The slave is trading his skill for his masters job.

When Woodrow Wilson said, “ we are citizens of the world, and the tragedy of our times is that we do not know this” he probably sowed the seed of ‘globalization’ which successful visionary American businessmen put to practice and presently have reached the stage of Business Process Outsourcing (BPO). However, a lot of present day Americans are paranoid about the future and live with images that was aptly summed by Dean Rusk when he stated “ while, we are sleeping two thirds of the world is plotting to do us in”-which coincidentally is the precise time the BPO’S are in operation in countries like India.

The BPO mantra is creating a storm in USA and Europe as people are divided between views of Woodrow Wilson and Dean Rusk.

Lets, first analyze what is meant by BPO-in layman terms. When any industry, or Institution decides to contract a part of their work to another agency, the following would be the direct fallout of this decision:(1) the persons who were performing these jobs become redundant (2) the industry or the institution can get contract terms that make getting these jobs outsourced more attractive. (3) It enhances profitability in their operations.

Now, when the jobs are contracted to a firm or agency within the country –aptly named onshore outsourcing- the only factor that is likely to benefit the Industry or Institution is a downsizing of manpower. It is highly unlikely that onshore outsourcing would bring in substantially better contract terms or higher profitability, as most American companies have near identical working conditions.

This is where off shore outsourcing comes to focus. If companies located in India or China perform the job that is outsourced to the satisfaction of their clients, then the company outsourcing can get the advantages of getting attractive contract terms vis-à-vis job contracts, quality of end product, quicker delivery schedules and lower job rates. Hence, offshore outsourcing has become synonymous with mega profits.

Now if this is how BPO’S function, then it sounds utopian –why then the hue and cry over this issue? To analyze the reasons lets, revert to expert opinions that has been gleaned from various websites
· Experts say that a software consultant at New York will demand $300 for 3 hours of his time, whereas a software engineer with identical skills at Philippines will be getting this as a months wage. However, the engineer at New York require to bill these high rates as nothing is cheap at New York –high rentals, an exorbitant cost of living coupled with payment of educational loans and mortgages –actually leaves this engineer with not much.
· Rolf Laundberg of the US chamber of commerce at a symposium organized at Capitol Hill has stated that 400,000 to 500,000 Information Technology jobs had been outsourced overseas and it is anticipated that by 2015 this number would be 3 million to 3.5 million and by 2008 India alone will account for 1.2 million jobs.
· Over two thirds of fortune 500 companies have resorted to outsourcing.
· John Doucette of United Technologies estimates that sending work alone to India results in a saving of 70%- a saving that enables American companies to be globally competitive and earn dollars for the company.
· Many Indian companies that are doing outsourcing jobs are certified level-5 companies- the highest rating based on Carnegie Mellon certification for Capability and Maturity model.
· Many American giants like IBM, AOL have their own fully owned subsidiaries in India and they had plans to recruit almost 10,000 additional persons for their operations in India.
Most US companies that have resorted to outsourcing from India have made substantial profits. Indian companies have also profited by doing outsourcing jobs and the Government of India has rightly nurtured the Information Sector By giving various sops to make them more attractive as this is proving to be a large provider of jobs and revenue.

It is at this stage, the US technocrat exits and in comes the US Senator with emotive outbursts against BPO’S- for public consumption-can 3.5 million Americans be deprived of their jobs? They ask, bring in legislations to curb outsourcing of jobs, they demand. Incidentally this is the first time the American public is seeing such a large exodus of jobs even when the economy is on an upswing qualifying it to be termed an oxymoron.

Americans have to come to terms, that in areas of Information technology Asian countries have an added edge as the education system is tailor made to provide sustenance to the inherent scientific talent, especially in pure sciences like mathematics -the cornerstone for high caliber IT professionals –which is widespread amongst the students. A who’s who of engineers of Silicon Valley and in premier Institutes like NASA and Universities will reveal a lot of Asian names particularly Indians who have had a very large success rate in building a prosperous United States.

In retrospection, BPO is probably the biggest Win –Win situation the American Industry has had in recent times and this is bound to continue. After all US is not losing jobs to Asian countries in fact by concentrating on core businesses and with higher profits through outsourcing newer Industries and jobs are bound to increase.

In conclusion, it maybe wise of US senators not to create a situation wherein outsourcing can be jeopardized through legislations by raising the bogey of losing jobs, which can boomerang by way of reduced revenue to companies and the government and the legislations created can destroy the creator of these legislations.

Published: 2006-05-07
Author: Balu

About the author or the publisher
I am a qualified Electronics Engineer and a freelance writer.I write articles and books spanning Technology, Management and Sociology.

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