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A better understanding of the Business Process Outsourcing Industry (BPO)

BY ALEXIS MONTEITH
Observer writer

Saturday, June 08, 2019

The Business Process Outsourcing (BPO) industry in Jamaica provides approximately 36,000 jobs and involves 60 companies across the island making it a very important contributor to the nation's economy. In Jamaica, this industry is valued at more than US$400 million.

Despite BPO's significance in Jamaica many people still do not have a clear understanding of what it is and how companies in the BPO sector operate. To gain an appreciation of what the industry is all about it is helpful to focus on the key word in the phrase 'business process outsourcing' which is 'outsourcing'.

Outsourcing often involves a company employing another company referred to as a third-party vendor or third-party supplier to handle some of its services or business. These services are usually divided into what are known as back office and front office operations. Front office activities include marketing, sales, customer support and technical support while back office operations may involve human resources, processing of payments, Information Technology services, accounting and more.

There are a number of reasons why a company may choose to outsource some of these activities but the primary reason is usually that it allows them to focus on their 'core competencies' which are simply the things that they do best. Using the majority of their time, money, manpower and technology to focus and improve upon these 'core competencies' while hiring other companies to do the rest makes financial sense in the long run.

The third-party vendors are usually better at performing the outsourced tasks because these activities are their primary focus. They dedicate their time, resources, research and technology to mastering these jobs and improving their service to clients.

The BPO operations which take place in Jamaica are primarily 'offshore outsourcing'. 'Offshore outsourcing' refers to companies in one country using third-party vendors in another country. Countries are selected that offer tax savings and/or lower labour costs. Saving on labour costs and salaries is another important reason for outsourcing and countries that have lower labour costs naturally offer cheaper services.

The term 'nearshore outsourcing' can also be used to describe the services in Jamaica because it refers to outsourcing performed in neighbouring or nearby countries. So, the business of American companies, for example, hiring BPO companies based in Jamaica would be correctly referred to as nearshore outsourcing because of the island's proximity to the USA.

Jamaica provides certain nearshore advantages for American companies. It is cheaper, easier and more convenient to do business with a company that is closer to home. Similarity in language within particular regions is another convenience and both Jamaica and the USA are English-speaking countries.

Our proximity advantage is also enhanced by other factors. In an article entitled 'Jamaica well suited for BPO industry — Epstein' published in April by the Jamaica Observer, Claude Duncan, vice president for sales and promotions at Jampro, notes that Jamaica's 'connectivity' to the outside world adds to its advantage of proximity to the USA and Canada.

“Being a nearshore location is one advantage, but being a major tourist destination is even more advantageous, because it means there are frequent flights in and out of the country. This means executives can arrive in the morning, do some work and leave in the evening, due to over 400 international flights weekly,” he is quoted as saying.

The article also indicates that he believes that “the familiarity of Jamaicans with the US and Canada makes the country a perfect nearshore BPO destination”.

In Jamaica, BPO's tend to operate in Special Economic Zones, for example, the Montego Bay Freeport.

Some of the BPO companies operating in Jamaica include itelbpo, Teleperformance, Startek, HGS, Xerox, Alorica and Sutherland Global Services.

 

 

 



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