Disadvantages of Business Process Outsourcing Essay

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In the recent decade, Business Process Outsourcing (BPO) has become a usual business phenomenon from a new business strategy in the bank industry around the world. Banks are increasingly outsourcing more activities to third parties and relying more heavily on vendors now more than ever before. (Deloitte, 2012) The Swiss bank UBS is not an exception. Since UBS set up the UBS India Service Centre in Hyderabad in 2006, parts of its back-office and middle-office functions have been outsourced to lower-cost places during the following years, such as India, China, Philippine and Poland. Most recent news says that UBS will begin outsourcing its fixed income trading platform to two technology groups in an attempt to save costs. (Reuters, 2014) However, in accompany with the rapid growing outsourcing trend, UBS announced plans to shut down its fixed income business and fire 10,000 bankers by 2015. The job cuts represent around 15 percent of the group's current headcount of 64,000. (CNBC News, 2012). When companies outsource a job, they typically eliminate the department that used to do it.
Although offshore outsourcing definitely has more than two problems and management skills is required to overcome them, this report will examine the case of UBS investment bank operations outsourcing and discuss two challenges for management: UBS employees are facing uncertain futures and losing motivations; offshore partners have different organizational or national cultures and the difference may…

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