Process Improvement in BPO companies

quality Business Process Outsourcing (BPO) means letting an outside company perform a process of the business. Outsourcing is done mainly with the objective of achieving cost savings. The outside vendor is able to do the same process at lower costs than what it would have cost the company to do it in-house.


The outside vendor is able to do the process at lower costs because of lower labor costs and its core competency in doing that process. Outsourcing contracts nowadays are mainly awarded to vendor companies located in developing and least developed countries. The labor costs in these countries are much lower than that in developed countries. It is due to this reason that a number of large American corporations have outsourced their business processes (like calling processes) to outsourcing companies in India. An Indian, sitting in Gurgaon, India, can do the job of receiving customer calls at much lower wages than an American sitting in New York or New Jersey.


Companies specializing in taking BPO work need to focus more on the processes outsourced so that they can be made more efficient and effective. By focusing on process improvement they would be able to create more satisfaction for the client company. This in turn will ensure a long term strategic relationship with the client. Indian BPO businesses are facing tough challenge from BPO businesses in countries like Philippines. These countries have comparable labor costs as India. Bangladesh and Vietnam boast of even lower labor costs than India. In such a scenario, Indian BPO companies will be able to sustain their competitive advantage by creating more value for client companies. This value can be created by trying to improve the processes outsourced so that drastic efficiency and effectiveness gains can be achieved for the client.


Most BPO companies focus only on following the key performance metrics given in the service level agreement (SLA) between them and the client company. They do not try to create any extra value for the client company. The objective is simply to perform on the key performance parameters and fulfill the outsourcing contract.BPO companies should focus on maximizing the satisfaction of client companies.


They should try to create delighted customers and not just satisfied ones. Delighted customers are those whose expectations have been surpassed by the actual service delivered. By creating delighted customers Indian BPO companies will be able to retain clients. It should not be forgotten that it is three times easier to retain an existing customer than to recruit a new one. This is even truer in the BPO business.


Reuse, Recycle and Reduce

quality In order to cut down wastage in manufacturing and production, it is important to identify the value-creating activities and non-value creating activities.The non-value creating activities need to be eliminated in order to reduce wastage and control costs. Tools like value-chain mapping can be helpful in identifying the non-value creating activities.


The contemporary business scenario is a highly competitive one. By reducing wastage, businesses can save costs. They can then pass on the cost savings to customers in the form of lower prices. The lower pricing can give a competitive advantage to a business over its rivals.Reuse and recycling can help manufacturing companies control wastage and cut down costs. Recycling also helps them in cutting down their carbon footprint and become environmentally more sustainable.


They can then market themselves as environmentally responsible companies. Increasing number of customers are becoming sensitive towards the environment. They want to purchase products of those companies which they perceive are environmentally responsible.When we talk of reuse & recycling of waste generated in manufacturing, we cannot ignore Henry Ford. Ford was the founder of the Ford Motor Company. It was he who first conceived assembly line manufacturing. Ford was almost obsessed with reuse and recycling. For example, the wood that was wasted in the car manufacturing process at Ford Motor Company was distilled by the company to extract chemicals. These chemicals were then sold in the outside market. At one point of time the sale of these chemicals brought more than $10000 a day to the company.


These days many manufacturing companies are breaking new technological grounds for achieving efficiency. For instance one manufacturing company creates very low temperature conditions by using liquid nitrogen. It then gets the metals cut in these conditions because the metal cutting speed of tools is five times faster in these conditions than in normal conditions.Businesses should not hesitate in using state-of-the-art technology for achieving higher efficiency and lower wastage.The investments made in these technologies are more than recovered in the medium and long term because of efficiency and productivity gains.


In a more developed world, the value of every resource will go up. Efficient utilization of resources is therefore very important. This cannot be achieved without a continuous focus on cutting down the wastages in the value chain. Business leaders of today and tomorrow would do well by emulating the likes of Henry Ford.