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Researchers
have recently rediscovered the outsourcing of services, and
have named their discovery business process outsourcing.
To what extent is BPO truly a new phenomenon; to what extent
is this just outsourcing, albeit of intangibles, and to what
extent is it merely cross-border wage rate arbitrage? Preliminary
research visits in India suggest that the range of activities
is truly extraordinary, including transaction processing;
securities trading portfolio design; software development,
testing, and maintenance; inbound call centers for customer
service and technical support; outbound call centers for cross-selling
and up-selling; and applied research. However, both the skilled
personnel and the cross-border labor rate differences have
existed for years, and both predated the recent surge in business
process outsourcing and in BPO research. We are therefore
forced to look for deeper explanations for the phenomenon,
why it is occurring now, the limitations to the range of activities
suitable for BPO, and the source of future competition to
currently dominant BPO locations in Bangalore, Hyderabad,
Manila, and elsewhere. Probably the best theoretical frameworks
for explaining our observations include Brickley's work in
Organizational Architecture at Rochester and our own research
at Wharton on the risks of sourcing and the changing boundary
of the firm.
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