Business Process Outsourcing (BPO): New Destinations

An article in The Wall Street Journal (Feb 11, written by Jackie Range) referred to a study by consultants McKinsey & Co. and Nasscom, the Indian tech and outsourcing industry group. The study found that, on average, company back offices -- or "captives," as they are called in the outsourcing industry -- were less efficient than companies run by outsourcing firms that specialize in the business.

The costs for some types of back office work was 30% higher. The survey also found that the higher costs did not lead to lower staff turnover or better-quality work.

A few years ago, it made sense to set up units in India and shift the work there. Costs were cut by about 45% motivating companies such as Goldman Sachs and J.P. Morgan Chase to set up back offices and employ thousands of workers. The times are changing.

After the initial period where benefits were substantial, office space jumped and salaries began to rise. In addition, staff turnover increased and companies had to spend money on recruiting and training.

While India remains a low cost destination, other locations are looking attractive, including Vietnam and Colombia. Our company GO Global is always looking for new low cost offshore locations where there is a ready supply of qualified workers with skills in accounting and data processing.

Particularly in recessionary times, our main goal is to help our clients prosper by keeping costs low on non-core business processes and keeping quality high.