Different Business Models

The introduction page in a company’s website ,especially  the one working in IT domain, is flooded with technical terms like –  Application development, product innovation, staff augmentation, RPO, BPO etc which define company’s  area of performance and expertise but are confusing for a beginner to identify. This post briefly explains these terms …

OUTSOURCING

Outsourcing is a management model in which some business process or functions are transferred to another company referred to as service provider. Outsourcing enables organizations to pay for only the services they need and when they need them. It also reduces the need to hire and train specialized staff, brings in fresh engineering expertise, and reduces capital and operating expenses. Outsourcing is said to help firms to perform well in their core competencies and offer greater budget flexibility and control

SUBSETS OF OUTSOURCING

Business process outsourcing (BPO) – BPO typically involves outsourcing of front office functions– customer related services and back office functions – finance or human resource functions.

ITES- BPO (Information technology Enables Services)– An ITES-BPO concerned with the use of technology in managing and processing information, especially in large organizations. An ITES service provider supports client company with the  processes that can be enabled with information technology. It covers diverse areas like finance, HR, administration, health care, telecommunication, manufacturing etc.

KPO (Knowledge Process Outsourcing) – KPO carry out  R&D activities for companies in fields of Market Research, Intellectual Property Rights, training,  environmental issue, genetic engineering, Biotechnology etc. KPO cater to  functions that require advanced analytical and technical skills as well as a high degree of proprietary domain expertise.

 LPO (legal process outsourcing) – LPO refers to the practice of a law firm or corporate obtaining legal support services from an outside law firm or legal support services company.

RPO (Recruitment Process outsourcing) – RPO is a form of business process outsourcing (BPO) where an employer transfers all or part of its recruitment processes to an external service provider. RPO providers manage the entire recruiting/hiring process from job profiling through the onboarding of the new hire, including staff, technology, method and reporting.

Banking BPO services – Some leading banks outsource their services related to customer support and maintenance to a third part service provider . These Banking BPO  manage services like  credit card landing, telemarketing activities, collection and recovery process, cheque processing and clearance services, fraud detection and settlement etc.

STAFF AUGMENTATION SERVICES

When shortage of skilled staff impacts company’s ability to deliver effective results , they rely on staff augmentation service providers. Staff Augmentation service providers facilitates addition of  temporary skills quick and cost effective, in addition to reducing recruitment and training costs.

APPLICATION SERVICE PROVIDER  (ASP)

ASP company provides application and computer based services to client online over a network . The application software resides on the vendor’s system and is accessed by users through a web browser  or by special purpose client software provided by the vendor. Example- ERP software, payroll software, marketing EPR applications etc.

PROJECT MANAGEMENT SERVICES–

Project management service providers are specialized business consulting companies which supports client projects with information, technologies and solutions for establishing best practices.

INFRASTRUCTURE MANAGEMENT SERVICES –

Some organizations outsource the routine components and activities of Infrastructure management like hardware and software requirement to  support operations, storage, , networking components, skilled manpower etc to a third party service provider. The Infrastructure service provider facilitates these services and specialized manpower . It owns the equipment and is responsible for housing, running and maintaining it.

An outsourcing company uses an outside firm or third party service provider to provide necessary business functions. The service provider company is in turn insourcing  these functions