1. What is a business process?
A collection of interrelated tasks that takes input and produces an output that is of value to a customer or to other process. Typical business processes include receiving an order, entering a transaction in QuickBooks, sending a purchase order, receiving an invoice.
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2. What is BPM?
Business Process Management (BPM) is the management of business processes. BPM seeks to make the businesses processes more effective, efficient, and adoptable to changing business conditions. For a detailed answer visit BPM wiki.
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3. What is BPO?
Business Process Outsourcing (BPO) is a method of using outside vendors to perform your business processes
like call centers, Employee Payroll, Accounting, etc.
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4. What is Financial and Accounting BPO?
It is a method by which you outsource your Financial and Accounts related work like Accounts
Payable, Accounts Receivable, Tax, Mortgage Processing, etc, to outside vendor
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5. What is Offshore BPO?
Offshore BPO is a method of moving any of your business processes from one country to another.
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6. What is Offshore F&A BPO?
Offshore F&A BPO is method of moving your Financial and Accounts related work from one country to another.
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7. Why small businesses should consider Financial and Accounting BPO?
The main reasons small businesses are performing F&A BPO, to cut cost, increase operational
efficiency, and to free internal resources from manual and labor incentive work to other core
F&A work.
For longer answer read
Business Case For Small Business Finance & Accounting (F&A) Offshoring .
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8. How small business can start their offshore Financial and Accounting BPO?
Small businesses need to go through following steps to successfully offshore there Financial and Accounting work:
- Find what F&A work to offshore.
- Select one or two F&A offshore vendor(s).
- Perform a pilot project with the F&A offshore vendor(s).
- Negotiate price and contract with the F&A offshore vendor.
For longer answer Read the article
Recipe for Successful Small Business Finance and Accounting (F&A) Offshoring.
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9. Why India is dominating in offshore BPO?
India offers several advantages that can be effectively leveraged by businesses in the US and in other
developed countries. Following are some of the fundamental reasons for India's dominant position in offshore
BPO market.
- India has the largest English-speaking population in the world after USA. Abundant skilled manpower has made
India a target destination for the BPO market.
- India offers world-class telecommunications and IT infrastructure, which are backbone for the BPO industry
- India is the world's largest democracy and its economy is growing more than 10% year after year for the
past 10 years and India has a positive economy and political outlook.
- Leading Fortune 500 businesses have already set up their own shared-services centers in India to offer
financial, accounting, payroll processing, taxation services.
- Several professionals who emigrated from India for higher studies to countries like USA, UK, etc are setting
up BPO firms in India and successfully delivering BPO projects to business clients all over the world.
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10. What are some of the problems of offshoring Finance and Accounting work to India?
Though India is a dominating force in the BPO market, recent survey
(http://money.cnn.com/2005/08/23/news/international/india_outsourcing/index.htm) shows rising labor cost and
poor physical infrastructure are some of the problems faced by the BPO firms in India. However still 70-80%
BPO work goes to India and the rest of it goes to countries like Philippians, Russia, China, etc.
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11. What types of Finance and Accounting work are offshored?
All types of Financial and Accounting related work like Account Payable (AP), Account Receivable (AR),
Bookkeeping, Payroll, Account Reconciliation, Corporate Tax, Individual Tax, Mortgage application processing,
Credit Check & verification, various auditing like Sarbanes Oxley, SAS 70, etc, are offshored.
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12. Is offshore BPO bad to the country that offshores the work?
No, different studies and research reports have proven that offshoring is not bad for any country.
In short-term some people may loose their jobs, but in long run it will help the country that is offshoring
the work. In fact many reports in USA have been published that shows offshoring creates jobs and
improves overall economy.
Following are some of the reports you can read about offshore and how it affects the economy.
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13. Are there any risks associated with small business offshore F&A BPO?
Like any new venture there are risks associated with offshore F&A BPO, but by careful planning the
risks can be completely avoided.
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14. What is KPO?
Knowledge process outsourcing (KPO) is the next step in BPO in which highly skilled jobs like financial analysis, medical research,
equity research, and stock analysis outsourced to countries like India, China, and Philippians. Generally people with advanced degree
like PhD, MS, and MBA will work on KPO projects.
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15. What is the difference between outsourcing and offshore outsourcing?
Outsourcing deals with transferring a company’s business process to an external organization. The external organization may be located in
the same country or in different country; if it is located in a different country it is called offshore outsourcing.
A parent company can have its own branch in a different country; if a work is transferred to its branch in a different country
then it is simply called offshoring.
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16. What are some of the security risks small businesses need to know before offshoring?
Data security while transferring the information over the internet
Data security in offshore provider’s locations
Security access restrictions and procedures for employees in offshore locations
Legal system in offshore locations
For a longer answer read Top Ten Security Risks for Small Business Outsourcing
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17. What is the difference between process outsourcing and product outsourcing?
Process outsourcing deals with BPO. Product outsourcing deals complete end to end product development by an outside vendor.
If the vendor is physically located in a different country then it is an offshore product outsourcing.
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18. What is nearshore outsourcing?
If a service or business process outsourced to a vendor geographically located closer to the country from where the work is
going it is called nearshore outsourcing. For example several companies in US outsource work to Mexico and Canada. Nearshore
outsourcing gives several benefits like less travel expenses, common culture and language.
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19. What is BTO?
BTO stands for Business Transformation outsourcing. In BTO a company’s entire business process is outsourced to the
BTO vendor. The BTO vendors not just manage the business processes, instead they work closely with the company to
transform and improve the business process to add strategic value to the shareholders of the company. For a longer answer
Read the Blog What is BTO?
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20. What is nearshore insourcing?
If a company sends it works to its subsidiary company located in the nearby country it is called nearshore insourcing.
For example IBM, USA sending work to IBM Canada
Limited.
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21. What is onshore insourcing?
If a company sends its work to its subsidiary company and if both companies are located in the same country it is called onshore insourcing.
For example Amazon.com uses its subsidiary Amazon Web Services, LLC. for all its data storage and other services.
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22. What is onshore outsourcing?
If a company sends it work to a different company and if both the companies are located in the same country it is called onshore outsourcing.
For example several small companies in US uses Amazon Web Services, LLC for their data storage needs. In this example both the small companies and
Amazon Web Services, LLC located in US.
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23. What does captive operation mean?
USA and UK based companies set up their own operations in India, China, and Philippians. These operations are called captive operation. For example US based IBM, started its own captive operation in India. It is also called offshore insourcing.
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24. What is Globalization and how it relates to services Globalization?
Simple answer for globalization is the integration and interdependence of world society. For longer answer refer Globalization wiki. Service globalization made the world as a single platform for companies to seamlessly deliver business services to the customers across time zones through technology. For example BPO services like call center, financial and accounting, payroll, mortgage processing are all examples of services globalization. Services globalization and BPO can be considered as synonyms.
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25. What is glocalization?
Glocalization is the combination of globalization and localization. Use Internet and other technologies to provide services on global level but customized to local regain where the service is provided. For example, Google provides searching services on global level by customizing it to country specific search results.
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26. What is TCM and how it relates to BPO?
Total Cost Management (TCM) refers to the process of identifying, forecasting and controlling the cost throughout the value chain in an organization. Companies use TCM to initiate and manage BPO projects.
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27. What is Build Operate Transfer Model?
Build Operate Transfer Model (BOT) are used by companies in developed countries like US and UK to setup development or support centers in developing countries like India and China. In this model the offshore provider helps companies in facilities setup, hiring staff members, and running the office for their clients for a period of time. Once the center and its services are well established, management and the ownership are transferred to the customer. This model helps companies to minimize the operational risks of setting up and running the centers in foreign land and improves the process efficiency. Generally BOT is used by large corporations.
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28. What is cosourcing?
The term cosourcing describes the mechanism in which companies carry out the business processes both by their own staff and external vendors. The external vendors can be consultants or offshore providers. Cosourcing is similar to BOT but typically used by small and medium (SMB) sized businesses.
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29. What is captive center?
Companies in US and Europe setup their own offshore centers in countries like India and China. Generally the captive center is used to provide services to its own parent company but occasionally it may sell its services to other companies as well.
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30. What is Fixed Pricing BPO?
It is a pricing model in which a BPO provider agrees to undertake a project for a fixed price. It can be hourly rate with fixed number of hours a week or it can be specific set of tasks performed by the outsource provider for a fixed price. There are both advantages and disadvantages in the fixed pricing model. Companies can accurately budget their BPO project cost. The main disadvantage is BPO provider may underestimate the cost and may provide poor quality services.
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31. What is global delivery model?
Global delivery model is a combination of work performed by a service provider both on on-site and in offshore. Typically the service providers will have development and support centers in several countries, based on their client needs they will engage their staff from different location around the globe. Big outsource providers like IBM, Accenture, TCS, Infosys, and Wipro have many centers around the world and they use them to provide services to their clients round the clock.
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32. What is “pay-as-you-go” BPO pricing model?
It is a pricing model in which a BPO provider bills the customer that varies each billing cycle. In some BPO projects customers may not know the
actual workload (e.g., number of transactions, call volume, etc.) in advance. Customers can go for “pay-as-you-go” pricing model and the BPO
vendor will bill the customer based on the work (e.g., hours worked, number of employees worked, number of transactions processed, etc.)
performed on a billing cycle. It is also called “utility pricing model”
or and “Commodity pricing.
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33. What is business services Sourcing?
Sourcing is a way of buying business services for the best price and quality at the right time from a business services vendor often called as
Business Process Outsource Vendor.
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34. What are two types of sourcing commonly used in business services outsourcing?
Insourcing and Outsourcing; if the work is performed by the company’s subsidiary it is called insourcing (inside), sourcing is happening
inside the company. If a third party vendor performs the work it is called as outsourcing, sourcing is happening outside the company.
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35. What is shared services?
In shared services, the IT and business, process services are consolidated rather than spread across different silos that are consumed by
all the business units within the organization.
Service Oriented Architecture (SOA) helps companies to build shared services. Some times
companies outsource their shared services to outsource provider(s).
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36. What is multisourcing and how it relates to BPO?
Companies outsource there IT and business processes to more than one outsource provider and it is called multisourcing. In multisourcing BPO,
from overall business process value chain business processes are removed; outsourced to multiple vendors, and the finished business processes
are integrated back into the business process value chain.
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37. What is business process reengineering and how it relates to BPO?
It is an initiative in which all the business processes are redesigned and modified in order to achieve drastic improvement in performance,
efficiency, and cost. When companies engage in BPO projects they often reengineer their business processes and outsource business processes
to save cost and improve performance.
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38. What is business process value chain?
Companies have several business processes that works together to add value either to their internal or external customers. The output of
one business process acts as the input to some other business process. By working together each business process creates value to the company
and collectively forms a business process value chain.
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39. What is DMADV and how it relates to BPO?
DMADV is part of six sigma quality control process that is mainly used in new product or a
business process creation. Several BPO vendors adopted DMADV in their BPO engagements to improve the quality of the
outsourced business processes. DMADV stands for:
- Define BPO goals and customer deliverables
- Measure performance criteria based on the goals and deliverables
- Analyze the business process options available in meeting the customer goals
- Design a detailed design plan to meet customer needs.
- Verify business process performance and quality to meet customer needs.
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40. What is DMAIC and how it relates to BPO?
DMAIC is same as DMADV but mainly used to improve the quality and performance of existing product or process. DMAIC stands for:
- Define BPO goals and customer deliverables
- Measure existing process performance criteria based on the goals and deliverables
- Analyze the business processes performance and quality issues
- Improve the business process by eliminating the performance and quality issues to meet customer goals
- Control future business process quality and performance
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41. What is Contract Research Organization, CRO?
Contract Research Organization, CRO provides various outsourcing services like pharmaceutical research services, Clinical trial management, Regulatory services to pharmaceutical, biotechnology and healthcare industries.
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42. What is Recruitment Process Outsourcing, RPO?
Recruitment Process Outsourcing, RPO deals with outsourcing companies recruitment and staffing activities to an outsource provider. The recruitment outsource provider acts on the company's behalf in the entire
process of identifying the candidates, conducting interviews and selecting the candidates for specific projects.
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43. What is the difference between RPO and staffing agency?
In RPO, the entire recruitment process is outsourced to an RPO provider and the RPO provider owns and manages the entire process for the companies. The staffing agency provides specific set of services to the
overall RPO process that are managed and controlled by the company.
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44. What is Legal Process Outsourcing, LPO?
Legal Process Outsourcing, LPO is a process in which companies and legal firms outsource
legal services to LPO vendors generally located in lower-wage countries like India, China, and Philippians. Typically legal services like
Contract Drafting, Legal Research, Intellectual Property Research, Paralegal services etc, are outsourced to LPO vendors.
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45. What is outsourcing governance?
Outsource governance is the set of procedures, customs, policies, rules and agreements that binds the relationship between the organization and outsource vendor. The outsource governance guides both the organization and the outsource vendor to collaborate effectively to succeed in the outsource initiative. From the organization's perspective it helps to align the corporate strategic goals with the outsource goals. From the outsource provider's perspective it helps to understand the needs of the organization and provide outsource services that continuously adds outsource value to the organization. Often times organizations include outsource governance as a part of their outsource contract.
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46. What is offshore outsourcing value?
Offshore outsourcing started as a cost-cutting strategy slowly changed into gaining outsource value, now a days organizations are looking for achieving measurable strategic values like increased operational efficiency, reduced customer wait time, gaining market share, reduced processing time etc.
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47. What is Infrastructure outsourcing?
It is the management of your Information technology (IT) systems like your enterprise servers, networks, and other related systems by a third-party vendor. Some times infrastructure outsource vendors can also mange your software systems like web site, business applications, database, mail server, custom applications etc. With the latest remote management tools, several Indian companies started offering offshore remote infrastructure management solutions
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48. What is EPO?
EPO stands for Engineering Process Outsourcing, all engineering type activities that are outsourced falls into this category. Following are some of the engineering services that are been outsourced to countries like India, China, etc., analysis and design in Structural, Mechanical and Electronic Engineering; embedded software, plant design, plant automation Services, CAD/CAM, and enterprise asset management.
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49. What is Medical Tourism and how it is related to offshore outsourcing?
Medical tourism is the term used to describe the practice of traveling to foreign countries to get medical treatment like heart surgery, joint knee surgery, cosmetic surgery, etc. Due to rapid increase in medical expenses and long wait time people from US, UK, and Europe are traveling to countries like India, China, Thailand, Philippians, Singapore, and Malaysia to get medical treatments. In typical offshore outsourcing, companies send IT and business processes to foreign countries. In medical tourism patients travel to foreign countries for medical treatment. Other than that, there is no relationship between medical tourism and offshore outsourcing.
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50. What is HRO and how it is related to RPO?
HRO stands for Human Resource Outsourcing and RPO is part of HRO. In HRO, companies outsource tasks like human resource activities like staffing, recruiting, training, payroll administration, benefits management, employee orientation, etc.
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51. What is PEO and how it is related to HRO?
Professional Employee Organization, PEO is a business entity that provides HRO services to client companies.
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52. What is Tactical Outsourcing?
Companies that outsource their IT or business processes to solve specific short-term problems falls in this category. The main focus of tactical outsourcing for companies is to save cost and they clearly know what they want from their outsource vendor. Companies write specific contract with the outsource vendor and make them accountable in delivering the result to their problems.
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53. What is Strategic Outsourcing?
In strategic outsourcing saving cost may not be the direct goal for companies and they sought long-term value from their outsource vendor like increase in operational efficiency, decrease in customer wait-time, decrease in time to market, etc. Companies engage with niche outsource vendors to solve core business problems that will have long-term impact to the entire company.
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54. What is Innovation Outsourcing?
Companies outsource to create innovation in their business by transforming and redefining their business models. In the current global economy companies must challenge their current business practices and transform it before the external forces makes the business obsolete. Company executives view outsourcing as the single most valuable tool to make innovative business changes in their organizations. In their recent book authors C.K. Prahalad and M.S. Krishnan in their recent book discusses how companies can find resources globally to serve customers individually with the concepts R=G and N=1.
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