Business process outsourcing

FIGURE 11 Segment of simulation model illustrating New Delhi campus network. This is where the business process outsourcing team and related servers in our distributed system are located. Modeling tool is OPNET. 

Globalization has been a key trend in the chemical industry for many years, with regard not only to business with suppliers and customers on all continents, but also to operations. The shift of production to the Far East and business process outsourcing to India or Eastern Europe are only the latest examples of this trend. 

IT-Enabled Services (ITES) The portion of the Information Technology industry focused on providing business services, such as call centers, insurance claims processing and medical records transcription, by utilizing the power of IT, especially the Internet. Most ITES functions are considered to be back-office procedures. Also, see Business Process Outsourcing (BPO). ... 

BPO Business Process Outsourcing. Contracting out for support services beyond information technology. Examples include human resources, finance and accounting, and logistics services. 

Logica (2010c) Business process outsourcing, http //www.logica.com/we-do/outsourcing/busi ness%20process%20outsourcing/. Accessed 13 September 2010... 

Outsourcing has become an important business process for the pharmaceutical industry since the 1970s. The development of a new drug all the way from conception to commercialization is one of the most demanding processes in the entire industrial world. This is confirmed by the R D expenditure of the pharmaceutical companies, which is the highest of all industries. It amounted to 32 billion in absolute terms in 2002 (+50% vs. 1998 +100% vs. 1994) more than 7% of sales for all the companies. For big pharma alone... 

In a study done by Accenture and Northeastern University (Mulani, 2005), it was found that Business Process Offshoring (BPO) doubled from 40% to 80% of companies surveyed during 1994-2004. As a percent of the budget, BPO increased from less than 20% in 1999 to 40% in 2004, nearly 15% annual growth. The same study also found that transportation and related services were the most supply chain management functions to be outsourced. Another growth area was the outsourcing of procurement function. 

Balakrishnan K., Mohan U., Seshadri S., 2008, Outsourcing of Front-End Business Processes Quality, Information, and Customer Contact, Journal of Operational Management, 26(2), pp. 288-302. 

All of the remaining processes must fall in behind these dominant business processes in regard to how they are handled. It may even be possible to eliminate some of them entirely or to outsource them. You will rarely find the core competence of your enterprise in the particularly clever handling of B and C business processes. 

Whilst clearly there were issues surrounding the design process and quality control, the case of Mattel highlights the challenges that face any company where key business processes are outsourced. Whereas in the past the risk to an organisation s reputation lay mainly within the company, and hence was under its control, now that risk resides across an extended supply network. In the case of the lead paint problem it seems that the source of the problem was not even an immediate supplier but a second tier supplier, i.e. the company that supplied the paint to the first tier contract manufacturer. 

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