Outsourcing is subcontracting a process or piece or work, to a third-party company. A firm’s decision to outsource is based on several factors such as lowering operational costs, resources, feasibility of competencies and global market dynamics. Outsourcing and off shoring are used interchangeably. Outsourcing involves contracting with a supplier, whereas off shoring is the transfer of an organizational function to another country. With emerging times and market dynamics there is now a very thin line drawn between outsourcing and off shoring. Buisness Process Outsourcing (BPO) is a part of the outsourcing industry and is dependent on information technology. This is referred to as Information Technology Enabled Services or ITES. Knowledge Process Outsourcing (KPO) and Legal Process Outsourcing (LPO) are some of the subsets of business process outsourcing to name a few. BPO is also an extension of the Service Industry. A Service Level Agreement (SLA) measures the quality of service and contractual agreements. However a more iron clad contract is drawn out to weed out any contractual loop holes. This is referred to as the Service Delivery SLA. An integral part of quality is CSAT scores. These are end user experiences measured through customer satisfaction questionnaires (CSAT). This function allows quality to be tracked over time and to tweak and fix any corrective action that has been identified and seek closure. BPO vendors offer their services on a fee-for-service basis. This is either on a Full Time Employee (FTE) or Pay For Performance (PFP) model. A healthy BPO unit will invest in the time and tested variable cost structure function as it does not require investing in assets thus making the unit flexible in its scalability. This revenue generation model is rapidly increasing as it allows for optimal utilization of funds and resources to run day to day businesses. In India, The National Association of Software and Services Companies (NASSCOM) mediates as a watch dog to the Indian software industry and Indian BPO industry. A significant concern for the BPO industry is Information Security and Data Intellectual Property. An outsourcing unit uses internal measures to minimize if not eradicate security issues besides seeking assistance from local law enforcement agencies. Such measures include but are not limited to: 1. Mobile phones and cameras are prohibited on the production floor as well as in data sensitive areas. 2. Ban on the usage of any recording devices on the production floor including paper and pens. This means creating a paperless environment wherein employees are restricted from recording any information and removing it where it can be accessed by unauthorized personnel. 3. Restricted or no usage of internet on the production floor for employees. In India data security is governed under the Information Technology Act, 2000.
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