BPO in Financial Sector:

BPO- An Introduction


Business Process outsourcing (BPO) is the delegation of an intensive business process to an outside service provider who owns administers and manages it according to a defined set of metrics. Business-process outsourcing is generally for back-end administrative functions that are necessary to run a business but are not a part of the core business.

The terms IT Enabled Services (ITES) and Business Process outsourcing (BPO) are used interchangeably now days.ITES is basically a subset of BPO. If process that is outsourced involves use of Information Technology it is called ITES else it just Business process outsourcing.

Companies are now increasingly outsourcing their Finance & Accounting functions followed by Human resource (HR) outsourcing. The evolution of IT services outsourcing in the Indian banks started from the basic level of annual maintenance contracts (AMCs) around 10-12 years ago and from there the IT services outsourcing curve in the banking segment has presently moved on to the level of Facilities Management (FM).

In the 1st Phase, BPO industry has grown mainly due to the business of catering towards services to foreign clients mainly based in USA & Europe. But with recession setting the world over, the profitability margins have decreased tremendously, thus causing consolidation in the industry. Since a client out source's more than one service, it makes sound business sense to offshore it from a single concern. Thus the players in the industry are versatile, offering a gamut of services to their clients.

ICICI Bank, HDFC Standard Life, UTI and ABN-Amro are now looking at business process management (BPM) to increase returns on investment, improve customer relationship management (CRM) and employee productivity.

For, these entities sustaining long-term customer relationship management (CRM) has become a challenge with almost everyone in the market with similar products.

A BPM system involves workflow automation, data imaging and features of enterprise application integration wherein the business processes, tasks and procedural steps of an organisation are defined, analysed and integrated, thus providing a framework for the organisation to deliver its (business) solutions.

A Call Center is an Information Technology Enabled Service, which acts as an access point to the customers of the enterprise.

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