An Analysis Of Business Process Outsourcing Strategies Of Public And Private Sector Banks In India

Abstract

This paper is a study of the recent trends of Business Process Outsourcing (BPO) strategies and practices among banking institutions in India.  The study attempts to analyze BPOs used by private and public banks using four dimensional descriptive conceptual dimensions of outsourcing:  1) shoring model (vendor location/service creation), 2) sourcing model (vendor type), 3) engagement model (number of vendors engaged), and 4) duration of the engagement (contract period).  The comparison of results reveals similar trends of outsourcing for public and private banks. However, public banks are more regulated, and thus are restricted from outsourcing of certain processes to avoid excessive risks of privacy of data and information related to customers.  From a financial strategic point of view, in the long run, the underlying profit margins of a public bank might have adverse effects.