Business Process Offshoring, more popularly known by its acronym, BPO, is the practice employed by the companies in the developed economies to move their business operations from their countries to the less expensive ones in bid to cut costs.
Today, economy has become global and as a corollary is facing stiff competition. With the reduction of international trade barriers following the advent of globalization, CIOs and business transformation managers across the world are at their wit’s end to reduce costs of operations. However, with the reduction of international trade barriers and emergence of enhanced capabilities in the telecommunication and data-communication space have provided the companies opportunities to spread their business operations in different locations across the world and leverage benefits of business process offshoring.
However, Business Process Offshoring has its own share of risks. Hence it is incumbent on the business managers to take steps which will stand them in good stead while protecting their companies from the ill-effects of the offshoring. There always remains the concern for the security of data which runs the risk of being compromised when organizations offshore their business functions.
Moving business expertise to another organization located outside the country is not without risks. This can create competition to the offshorer from the offshore entity itself. Hence, it is advisable for the offshorers that they should take appropriate legal advice as far as protection of intellectual property rights is concerned.
Cloud computing is gaining momentum. However, in the process when the data is being in constant move from the offshorer to the service provider, the risk of the loss, damage and misuse of information becomes a distinct possibility. So, the offshore has to ensure that the service provider has the requisite technical and operational safeguards to deal with any unfavorable condition arising out of loss of data.
Thanks to the rise in the business of offshoring, there has been a growing demand for the skilled personnel in famous offshoring destinations such as India. Hence there is an occurrence of high staff attrition rates. Apart from the loss of knowledge and confidential data that accompanies the exit of skilled personnel from the service provider, there is every possibility that the operations of the service provider may get disrupted. This may lead to poor service delivery.
Last but not the least, the companies opting to move their business operations to the service provider physically located offshore should consider the geo-political risks associated with the move. The offshore destination should be politically and economically stable.
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