Business process outsourcing (BPO) has become a major trend in the past couple of years and this has become a huge source of income for many people especially in developing countries. International companies are opting for this as it is cheaper and increases the operating efficiency of their business. Besides, this outsourcing of back office operations is more prominent in India and Philippines, and the main drivers of BPO are globalization, economics and geopolitics. So, the purpose of this article is to better understand these drivers of BPO phenomenon, read on to know more.
With integration and interconnectivity of global economies beginning in the 1990’s many developing countries began opening up their markets for international players. This created greater economic interactions between the eastern and western countries, letting western companies operate within the borders of many developing nations. As a result of this and due to the presence of a huge number of English speaking graduates, gave rise to business process outsourcing companies. They outsourced back office operations like call centres for multinational companies and this trend accelerated especially during the dot-com boom. Some of the world renowned firms in India and other East Asian countries emerged during this period.
The Economic Aspect
There are two ways the economies of countries can benefit from global trade. First they can make profit by exporting goods and services that are cheaper to manufacture at home, second they can make profit by importing goods and services from countries where it is cheaper. This is a mutually beneficial aspect of global trade that gave rise to the phenomena of BPO and technology exchange. The investment for the operation for these BPO services came from the western countries. The cheaper services due to the large pool of English speaking work force in the eastern countries were exported back to the western countries from where investments came. And this became the boom time for business process outsourcing companies.
Due to the above two reasons western countries began to corporate and interact with eastern countries facilitating world trade and acceleration globalisation. In a way, the three drivers of the BPO phenomenon feed into each other because they are interlinked and intertwined. This made perfect sense both politically and economically as it is a win-win situation that helped the economies of both east and west to develop. Also, it led to the spreading and sharing of knowledge such that it lessened the information gap between developed and developing nations.
On a final note, the process of business process outsourcing is mainly driven by the fact that the population of developed nations are ageing, while the developing nations have youthful working populations.