Business process outsourcing (BPO) is a subset of outsourcing that involves the

contracting of the operations and responsibilities of specific business functions (or

processes) to a third-party service provider. Originally, this was associated with
manufacturing firms, such as Coca Cola that outsourced large segments of its supply
chain. In the contemporary context, it is primarily used to refer to the outsourcing of
business processing services to an outside firm, replacing in-house services with labor
from an outside firm.

BPO is typically categorized into back office outsourcing - which includes internal
business functions such as human resources or finance and accounting, and front office
outsourcing - which includes customer-related services such as contact center services.

BPO that is contracted outside a company's country is called offshore outsourcing. BPO
that is contracted to a company's neighboring (or nearby) country is called near shore
outsourcing.

BPO is an important branch and trend of outsourcing that many management theories and
methodologies generated and developed for outsourcing can be applied to. Many
corporations, like Dell, AIG, IBM and Citi Group, have been using BPO and leveraging
the larger scale of outside service providers to cut costs, improve process quality and
speed time to market. Also, many IT service vendors, like IBM, EDS, Accenture,
and SAP, have integrated BPO services into their systems and models.

BPO started with non-core processes and is now moving towards more critical
applications. It has boomed with call centers and customer support processes, and now is
happening with software development, Human Resources (HR), Finance and Accounting
(F&A), training, payroll, and procurement. The trend is moving beyond the outsourcing
of typical back-office functions into middle-office functions. BPO is catching up with
industries like medical transcription, animation production, and even disaster recovery
management systems. Moreover, it is not just India or the Philippines that are booming
with BPO. Central & Eastern Europe’s markets are aggressively chasing near shore
outsourcing from Europe.

We all know that quality assurance stands for a proven process of verifying and checking
the quality of a service or product. In a BPO, quality pertains to the level of customer
service that ensures success of the business venture.

Businesses mostly select BPO firms to ensure continued support for its customers. So
quality assurance in a business process outsourcing firm will be able to offer clients with
improved processes. Moreover, applying the given standard proves to be one
fundamental ways to measure the effectiveness of the on-going business processes.

Quality assurance as an important yardstick improves business procedures. There are

some defined standards for judging the existing quality of a BPO firm. Some of the most
important standards are Six Sigma, Total Quality Management, ISO 900 and others.
Six Sigma is a business management strategy originally developed by Motorola, USA in
1986. As of 2010, it is widely used in many sectors of industry, although its use is not
without controversy.

Six Sigma seeks to improve the quality of process outputs by identifying and removing
the causes of defects (errors) and minimizing variability in manufacturing and business
processes. It uses a set of quality management methods, including statistical methods, and
creates a special infrastructure of people within the organization ("Black Belts", "Green
Belts", etc.) who are experts in these methods. Each Six Sigma project carried out within
an organization follows a defined sequence of steps and has quantified financial targets
(cost reduction or profit increase).

Since the late 1980s, firms around the world have launched Total Quality Management
(TQM) programs in an attempt to retain or regain competitiveness in order to achieve
customer satisfaction in the face of increasing competition from around the world in this
era of globalization. TQM is an integrative philosophy of management for continuously
improving the quality of products and processes.

TQM functions on the premise that the quality of the products and processes is the
responsibility of everyone who is involved with the creation or consumption of the
products or services offered by the organization. In other words, TQM capitalizes on the
involvement of management, workforce, suppliers, and even customers, in order to meet
or exceed customer expectations. Considering the practices of TQM as discussed in six
empirical studies, Cua, McKone, and Schroeder (2001) identified the nine common TQM
practices as cross-functional product design, process management, supplier quality
management, customer involvement, information and feedback, committed leadership,
strategic planning, cross-functional training, and employee involvement.

The ISO 9000 family of standards relate to quality management systems and are
designed to help organizations ensure they meet the needs of customers and other
stakeholders. The standards are published by ISO, the International Organization for
Standardization and available through National standards bodies.

ISO 9000 deals with the fundamentals of quality management systems , including the
eight management principles on which the family of standards is based. ISO 9001 deals
with the requirements that organizations wishing to meet the standard have to meet.
Most standards are designed to attain a greater productivity, efficiency and accuracy in
the business services. Now there are wide-ranging advantages of delivering quality
assurance of the outsourced projects. The most prominent ones include:

Increased Customer Satisfaction:

Maintaining the quality standards improves overall business profits through the increased
customer satisfaction. It further helps companies to strengthen relationships with the
customer offering good service continuously. Customers remain involved in this process
following a variety of marketing tactics that determine customer needs to be met

Improved company efficiency and productivity

Quality assurance as an essential step is usually performed throughout the service or

product life. This is the way flaws, issues and other problems are constantly addressed or
corrected that ensures loss of time due to ineffective or inefficient practices.

Improved business relations

Improved business operations pave the way for the accomplishment of the specified
performance and the quality metrics. It improves business relations between the
outsourcing service provider and the client. The defined quality standard also helps to
improve business relations by offering on-demand access to the live reports containing
cost structure, operational risks, project progress and others

Improved time-efficiency of every process

By making use of the advanced IT and telecommunication systems with the required
quality assurance help in improving time efficiency of every process. On the whole, it
also improves the operational efficiency.

Reduces operational costs:

The proven standards ensure that all processes are finely implemented to meet the clearly
defined goals. Cost savings is evident from the implemented quality management
methods. With the right quality assistance, reduction in the operational costs will be
evident.

Enhances brand image of services and products

By utilizing services of any outsource vendor, an organization will be able to improve

quality of the major business processes. Most outsourced projects will directly influence
the levels of customer satisfaction. When a service provider offers quality assistance, it
automatically results in the form of superior customer satisfaction. In this process, the
reputation and the brand image of the business organization are highly improved.

Improves the competitive strength

With the given quality standards, BPO firms will endeavor to enhance the standards of
customer service. Such standards directly influence the customer perceptions relating to
any associated services and products. It creates a favorable condition for the services and
products in any targeted markets.

Given the potential economic impact of BPO and the critical role of technology in
improving BPO service, it is necessary to conduct research on the impact of technology
on BPO. However, most of the relatively recent research is concerned with how
outsourcing affects the companies’ competitive advantages. There is a lack of academic
research on BPO quality, as most findings are obtained by BPO industry insiders and
advisors. The focus in BPO is changing from just operational cost cutting, into a
transformational process where extra benefits are realized by buyers who demand higher
level of quality to be supplied by the service providers processes. In this paper, we
identify the mechanisms that would contribute to the perception of the customer in
judging service quality, explore the relevance of technology and service quality for BPO,
and provide managerial insights to BPO practitioners.

To construct a pragmatic service quality framework for the BPO industry, we borrow the
European Foundation for Quality Management Excellence Model (EFQMEM), which
divides the quality criteria into enablers and results.
Quality dimension in BPO
As a special service provider, BPO service quality is the degree and direction of variation
between the service receiver’s expectations and perceptions. As Kumar (2004) pointed
out “Service excellence has become the basic instinct and real value differentiator that
drives client satisfaction. Operational excellence, product/service leadership and highly
effective client relationship management are keys to assuring superior service delivery.
The service provider must have a clearly defined service vision in line with outsourcers’
priorities and hones on creating measurable values”. Therefore, we develop a BPO
quality structure including seven dimensions shown in Table 3 below. In each dimension,
the sub-measures are identified based on the nature of BPO service. These criteria are
strongly acknowledged as some of the main factors leading to BPO success.

1. Reliability
Reliability is how to manage the outsourcing relationship, assuring the successful service
delivery after the deal is signed and the outsourced process activities are in operation.
Grover et al. (1996) suggested that the success of outsourcing is heavily dependent on the
reliability of the service a service provider provides. In Human Capital Management, the
finalized and easy-to-use results should be available. A full HRRP service begins with the
job requisition through hiring the new employee, including: information collection and
applications management, candidate sourcing (internally and externally), recruitment
agencies management, screening, interviewing and testing, reference checking, offer and
contracts management, on-boarding and even any needed initial training.
2. Tangibility
Tangibility includes the physical evidence of service. Technology is the first visible
quality feature in BPO. Technology and applications allow the monitoring of process
operations. Technology adds to the BPO quality and success by making the operations
more visible by different views suited for different role-based levels in the client’s
organization, e.g. operational vs. managerial vs. strategic and planning level

3. Responsiveness
Responsiveness concerns the willingness or readiness of employees to provide service.
Customer-facing staff can be brought up to speed with new offerings far more rapidly,
and brand service values can be communicated to customer touch points more efficiently
and consistently. Providers cannot escape errors at any stage of BPO service, so the
ability to discover errors swiftly and track down their causes are important. This will
result in the quick operation restoration, and thereby increase client satisfaction due to
minimum interruption and early discovery of problems. This is aligned with Tax and
Brown’s (1998) arguments regarding how effective service recovery from failure is one
of the major demands that customers expect.

4. Conformance
Conformance is the degree to which the design and operation of an application of service
meets its established standards. Although BPO is usually considered service first, it is
actually providing applications to organizations. Any outsourced business process
involves some specifications which are usually restricted by a contract. The BPO
activities should align the outsourcing objectives with the appropriate contract reviews,
performance monitoring and measurement systems. Therefore, quality BPO service
should provide the needed framework for driving the behavior of the BPO provider
towards sustaining the quality level of service required.
Despite the crucial role of the contract and the Service Level Agreement (SLA) in
controlling the relationship, BPO governance should be built around a partnership to
support the increasing dependency between the client and the service provider. Such a
trusted provider/supplier relationship would revolve around open communication,
fairness and the belief in mutual benefit and interdependence. The quality monitoring and
measurement should be viewed as a benefit for both parties.

Flexibility

Quality is not only delivering the service but consistency in delivery. BPO contracts are
relatively long termed ,between 3 and 7 years, and the clients’ requirements and needs
frequently change. In order to achieve sustainable quality, BPO service providers need to
cope with scope or scale changes including clients’ organizational restructuring, Merge
and Acquisition (M&A) activities or even the sourcing strategy change. In other words,
flexibility is one of the important qualities of BPO service. BPO agreements should be
designed to allow for adaptability. Contracts should enable elements to evolve and adapt
to organizations’ service level requirements, like service level improvement clauses with
incentives schemes. Quality entails service providers to proactively enhance value, hence
the need to adapt to their clients’ changing needs. This is an element of being customer
focused and aligned to clients’ strategic needs. In addition to day-to-day operations, the
service providers should engage in frequent benchmarking and innovation for their own
processes to be able to cope with the increasing quality demands while maintaining their
efficiencies and economies of skill and scale to drive long-term profitability. While the
BPO relationship should be built on partnership, the contracts must be built with the view
of the possibility of breakup, in case of re-sourcing the processes back in-house or move
to another BPO provider.

6. Assurance and Empathy

Assurance and empathy are both client focused quality criteria. Assurance is reflected by
the knowledge and courtesy of employees and their ability to instill trust and confidence.
Empathy is the degree of individualized attention the service provider gives its
customers. As the quality advantages of BPO service, assurance and empathy are the
critical view organizations gain when they outsource their processes to the provider. In
other words, assurance and empathy help improve the perceived service quality, customer
value and customer satisfaction. In a HRO deal, the buyer and the provider can hold a
monthly virtual meeting between senior managers to measure the each side’s satisfaction.
This way, any quality drop can be more visible at senior levels and more likely to be
rapidly resolved.

7. Security
In BPO, the outsourced business process often interacts with other business processes of
the customer, or intervene important or confidential business information. BPO service
has to guarantee the security of the customer business. Concretely, the quality of security
should be analyzed from the following aspects:
• Confidential data and information;
• Security auditing;
• Encryption and anti-virus protection;
• Secure physical environment.

Syntel, Inc. Is a global provider of Information Technology (IT) and Knowledge Process
Outsourcing (KPO) solutions, with global development centers in India and the United
States.

Syntel was founded in Troy, Michigan in 1980 with an initial investment of $2,000. Its
founders were Bharat Desai, an Indian graduate of the University of Michigan's Stephen
M. Ross School of Business, and Neerja Sethi. Originally named Systems International,
the company began providing software staffing services to local corporations, earning
$30,000 in its first year.

Quality Drives Customer Satisfaction

The foundation of customer satisfaction starts with quality. Syntel embraces this
belief and puts a strong emphasis on optimal quality in our service and deliverables.
Inherent in this commitment is our pledge to pursuing zero-defect software.

Syntel’s holistic, enterprise-wide Quality System integrates multiple quality standards

like Six Sigma, ISO, ITIL, and SEI CMMi in delivering enhanced productivity and
continual, ongoing improvement. Our formal quality accreditations include ISO
27001:2005, SEI CMMi Level 5 and ISO 9001:2000. We also have SAS 70 Type II
Certification.

In addition, Syntel has implemented LEAN principles throughout its delivery

organization to provide our customers with the most optimized and efficient solutions.

Our Quality System includes the following elements:

• Well-designed processes for ensuring quality of software products and services to

meet customer requirements
• Integrated quality control activities such as reviews, inspection, and testing in the
development processes
• Metrics to monitor processes, products and services, including measurement of
responsiveness, accuracy, completeness, timeliness, efficiency, and auditability
• Project schedule monitoring to ensure timely deliveries
• Focus on defect prevention through training, standards, rules and practices
• Human resource development and training

Benefits to Customers

Syntel’s robust Quality System translates to benefits for our customers, including:

• Reduced Risks. Through definition and management of IT processes, Syntel

provides consistent performance, reducing unknowns that lead to risk.
• Reduced Costs. With better management, tracking and control, Syntel increases
work process efficiency leading to lower IT project costs.
• Better Quality. Objective and quantitative analysis of process performance gives
Syntel the ability and insight to improve the efficacy of work processes and
reduce causes of non-conformance. There is also less time and resource
expenditure on re-work and correction of defects, meaning less cost and faster
time-to-market.

Dedicated Quality Group

Syntel's dedicated quality group oversees several elements of the quality system at an
organizational level, ensuring the sharing of best practices and lessons learned across
all project teams. This includes:

• Setting organizational process capability baseline for quality and processes

• Institutionalizing defect prevention activities
• Incorporating new technologies into the Quality System to achieve productivity
and quality improvements
• Organization-wide participation in process improvements

We also have a centralized internal audit group, which:

• Determines the level of compliance with the documented Quality System

• Determines the effectiveness of the QMS in meeting the stated quality
objectives.Identifies new processes, methods, tools used in projects audited and
submits them for evaluation and release to other projects in the organization
• Tracks and resolves noncompliances and corrective actions