[INDUSTRY SPECIFIC] Industry-specific BPO Will Continue to EvolveSruthi Ramakrishnan
BPO driven by industry-specific knowledge helps achieve measurable business outcomes.
Mortgage Process Outsourcing- The major challenge which service providers face while offering mortgage services is the integration of services like loan origination, vendor management, post-closing processing services, third party services until underwriting, modification services, technology services etc.
TCS (Tata Consultancy Services) shared with Global Services (New Demands in Mortgage Processing BPO, September 28, 2009) that as mortgage rates dropped to under 5% early last year, re-finance activity increased creating a spike in demand for origination and loan closing related services. This demand cooled as rates edged up. For default related services including MODs and real estate owned (REO) there were early demand spikes as servicers began to deal with the mortgage crisis. An uncertain regulatory environment and political pressures for moratoria on foreclosures late in 2008 contributed to a slowing in default outsourcing. As moratoria expire and MOD programs become better defined, service providers are facing a need to rapidly add scale. Cycle time has shortened dramatically. For service providers this translates into a need for excellence in manpower management, recruiting, and training. An additional critical element is deep domain expertise – the ability to work with the client to optimize processes, find ways to automate more fully and expand the scope of potentially outsourced business processes.
Life sciences outsourcing- The industry-wide drive for pharmaceutical and biotechnology companies to lower costs, access specialized services and increase flexibility through outsourcing work to Contract Service Providers (CSPs) was highlighted by BioCrossroads’ latest report on Industry Developments in U.S. Biopharmaceutical Contract Services. The new report acknowledges that while 2009 was slow for many CSPs, the underlying reasons for pharmaceutical and biotechnology companies to outsource selected activities will continue for the foreseeable future. CSPs should continue to grow as the pharmaceutical industry moves towards a more flexible business model. Biomarker services and the need for larger clinical trials will provide opportunities for additional growth in future years.
Besides India and Japan, China is emerging as a potential industry leader in this vertical. According to a 2008 report ‘The Changing Dynamics of Pharma Outsourcing in Asia: Are You Readjusting Your Sights?’ by PriceWaterhouseCoopers, big pharmaceutical companies rated China as the best location for outsourcing in Asia. The country’s large population represents enormous market potential for Western firms whose domestic profits are coming to a standstill. Pharma companies are also drawn by China’s low production costs. The Wall Street Journal estimates that the total cost of a scientist in China is $30,000, compared to $250,000 in the U.S. Worldwide pharmaceutical firms looking to expand sales into emerging markets are contributing resources to China.
Supply Management Outsourcing- The market surpassed a billion dollars in expenditure for the first time last year, with a 30% hike in expenditure on new multi-scope BPO contracts, as reported by the AMR Research Supplier Management BPO services report of 2009. The main reason for this uptake is the increased availability of low-cost offshore services for procure-to-pay and strategic sourcing support, with 72 percent of services being delivered from India for largely North American and European organizations. But experts say that this market will not sustain its growth trajectory unless customers think beyond short-term labor arbitrage, and service providers introduce significant process and technology enhancements to the early adopters to help them optimize their delivery.
[INDUSTRY SPECIFIC] Industry-specific BPO Will Continue to Evolve
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