Eying the business process outsourcing (BPO) market in Taiwan, the US-based Vsource Inc launched its Taiwan branch yesterday to help companies here become cost-efficient.
"We see a tremendous opportunity here," Vsource CEO Phil Kelly said at yesterday's opening ceremony.
"We will start with multinational companies and local companies that have overseas operations," he said.
BPO, the long-term contracting out of non-core business processes to an outside provider to help achieve increased shareholder value, became common in the US during the late 1980s when large US enterprises outsourced most of their non-core services to other local companies.
The non-core businesses include banking, finance, asset management, sales and marketing, human resources and Web-related services.
But as many Western companies expanded offshore through partnerships and acquisitions, they also sought cost-efficient production overseas while focusing increasingly on their main line of business. Therefore, in the early 1990s, BPO providers began to emerge in developing countries such as India, China and Brazil, according to a UN report.
"BPO will become a US$585 billion market worldwide and will include a wide range of functions along a company's value chain," the UN Conference on Trade and Development (UNCTAD) said last month in the "E-commerce and Development Report 2003," citing research by Goldman Sachs.
Viewing the BPO as a promising sector and also the most recent trend in the outsourcing market, Vsource joined the bandwagon in 2001 and later expanded its business from its US home market to Malaysia, Japan and Hong Kong.
The company has helped its customers, such as FedEx Express Corp, Gateway Inc and ABN AMRO Bank N.V., save at least 25 percent on costs, Kelly said.
For the Taiwan branch, Vsource has invested NT$25 million here and will keep expanding in accordance with its business scale, Joyce Mei (梅家仁), general manager of Vsource Taiwan Insurance Broker Ltd, said yesterday. The company has about 40 local employees.
While Taiwan is not one of the favorite countries for BPO service providers, as indicated in the UN report, one local industrialist said the sector is full of potential here.
"As business margins are getting slimmer amid competition, many local companies, even medium and small ones, are seeking to cut costs through applying the co-hosting service," said Richard Hsieh (
EDS Taiwan is an arm of the US-based EDS Corp that entered the Taiwan market in 1989 and became the nation's largest BPO provider, followed by IBM Corp.
"We welcome new entries to jointly exploit this market," Hsieh said. The company currently has some 100 clients ranging from banking institutions and traditional manufacturers to government agencies. Most of them are in need of services in the areas of network infrastructure, system maintenance, accounting systems and personnel management, Hsieh said.
In the past, local companies were reluctant to outsource their businesses because they did not want to spend extra money. But as companies started to sense that outsourcing of those jobs was successful and reliable, they joined the trend, Hsieh said.
In the building up of an Internet network throughout a company, for example, local enterprises found out they can save a lot by having the job done by other companies, he said.