Saturday, June 24, 2017

BPO is no long-term solution *


Business Process Outsourcing (BPO) is being touted as an opportunity for the diversification of our economy. This is when businesses, particularly in developed countries, prefer to outsource non-core business activities usually to developing countries; these businesses prefer to use their highly paid human resources in more lucrative activities, giving the off-shore countries a comparative advantage since they cannot compete directly in the core business types.

BPO companies aggregate demands across out-sourcing firms and so provide economies of scale in addition to lower operating costs (labour etc.) and incentives of doing business off-shore. Hence there is competition among the developing countries via incentives (including tax-free zones) to attract such outsourced business.

 

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