Disadvantages of Business Process Outsourcing Essay

In the recent decade, Business Process Outsourcing (BPO) has become a usual business phenomenon from a new business strategy in the bank industry around the world. Banks are increasingly outsourcing more activities to third parties and relying more heavily on vendors now more than ever before. (Deloitte, 2012) The Swiss bank UBS is not an exception. Since UBS set up the UBS India Service Centre in Hyderabad in 2006, parts of its back-office and middle-office functions have been outsourced to lower-cost places during the following years, such as India, China, Philippine and Poland. Most recent news says that UBS will begin outsourcing its fixed income trading platform to two technology groups in an attempt to save costs. (Reuters, 2014)†¦show more content†¦BPO that is contracted outside a companys country is called offshore outsourcing (Tas, J. Sunder, S. , 2004) Offshore outsourcing represents one aspect of how globalization is occurring in the current economies. Globalization is the interdependency of transportation, distribution, communication, and economic networks across international borders. (Gibson, Ivancevich, Donnelly, Konopaske, 2009) It means that the labor supply market is globalized and that cross-cultural management can become essential and more important than ever before. BPO is not simply moving jobs to a distant country and starting saving cost right away. BPO in the banking industry requires bank to provide on-site training, which normally takes from three months to a full year. (Overby, 2003) The training is a knowledge transfer process from one organization to another, which is necessary and critical to make sure the work can be transferred from onshore to offshore people smoothly. It’s a significant stage of outsourcing implementation, which may determine outsourcing will be a success or not. Below case shows how the offshore outsourcing is occurring during the implementation stage. Team A is UBS investment banking operations located in UK. It is planed to be offshore outsourced to an external company located in a foreign country. A team of offshore workers came to UK and started to learn tasks sitting beside their onshore partnersShow MoreRelatedAdvantages and Disadvantages of Outsourcing888 Words   |  4 PagesAdvantages and Disadvantages of Outsourcing Outsourcing is an allocation of specific business processes to a specialist external service provider. Most of the times an organization cannot handle all aspects of a business process internally. Additionally some processes are temporary and the organization does not intend to hire in-house professionals to perform the tasks. Once the task is outsourced to the service provider, he will take the responsibility of carrying out the tasks and maintainingRead MoreThe Advantages and Disadvantages of Outsourcing1442 Words   |  6 PagesWhat are the advantages and disadvantages to outsourcing in the global marketplace? 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