The intersection of technology and globalization has changed the way business is done and created new business opportunities in the international marketplace.
Business process outsourcing (BPO) has evolved with time and rampant innovation in technology, and the BPO trend is accelerating. It is a subset of outsourcing that involves the contracting of the operations and responsibilities of a specific business process to a third-party service provider. Originally, outsourcing was associated with manufacturing firms such as The Coca-Cola Co (KO) that outsourced large segments of its supply chain.
BPO is typically categorized into back office outsourcing, including internal business functions like human resources or finance and accounting, and front office outsourcing, including customer-related and contact center services. In addition, other outsourcing segments within the global industry include business services, energy, technology, healthcare and pharmaceuticals, retail, travel and transport, telecom and media.
The revenue of the global outsourced services industry rose steadily year-over-year from 45 billion US dollars in 2000 to just under 100 billion in 2012. In the coming years, the trend should only continue.
India is a clear leader in this area. India offers a highly skilled, educated, cost effective, English-speaking labor pool, and is definitely a popular choice. Still, many organizations are understandably apprehensive about having people on the other side of the world support critical business functions. However, some of the best outsourcing providers have mitigated the risk and addresses the concerns that clients may have about placing their work offshore through their innovative project management strategies.
Successful Magnet Stocks in the Space
The top ranked Magnet stock in this space is WNS Holdings Limited (WNS) . The company operates in two segments: WNS Global BPO and WNS Auto Claims BPO. Its clients are primarily in the travel, banking, financial services, insurance, healthcare and utilities, retail and consumer product industries. WNS Global is a global business process management company headquartered in Mumbai, India. It has more than 29,000 employees working in 37 "delivery centers" across the world, including India, USA, United Kingdom, China, Costa Rica, Philippines, Poland, Romania, South Africa, and Sri Lanka.
Another company that has embraced the BPO model is Accenture Plc (ACN) . One of the top multinational management consulting, technology services, and outsourcing company, ACN reported revenues of over $30.0 billion with approximately over 330,000 employees, serving clients in more than 200 cities in 56 countries. In 2012, Accenture had about 80,000 employees in India, more than in any other country, about 40,000 in the US, and about 35,000 in the Philippines. Accenture's current clients include 89 of the Fortune Global 100 and more than three-quarters of the Fortune Global 500.
While there have been push back from US consumers regarding poor service at certain international call centers, it is clear to me that the more a company is willing to think globally, the more they open themselves up to greater profits. The BPO model should be expected to grow for years to come.
By Jordan Kimmel, Chief Investment Officer at Investview, Inc. (INVU).
DISCLOSURE: The views and opinions expressed in this article are those of the authors, and do not represent the views of equities.com. Readers should not consider statements made by the author as formal recommendations and should consult their financial advisor before making any investment decisions. To read our full disclosure, please go to: http://www.equities.com/disclaimer