A Qualitative Examination of Pharmaceutical Business Service ...

Introduction

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Business Process Outsourcing (BPO) is a course of action, which involves the assignment of specific business activity to a third party company or a service provider. BPO originally began with the outsourcing of payroll and other financial activities to outside companies. This was followed by the outsourcing of employees? benefits managements to outside services providers. As of today, the BPO includes a diverse range of business activities that are generally not related to the nuclear functions of a business enterprise (Brown D. & Wilson S., 2008). The service areas of a BPO include Human Resources (HRO), Financial and Accounting Services (FAO), claims processing and call center service outsourcing. Recently, business enterprises have been specializing in Knowledge Process Outsourcing (KPO) within the BPO area, which requires specialized expertise and skill as it involves areas of company?s interest (Chakrabarty S., 2008). This specialized area of BPO is of extreme importance as it applies to the Pharmaceutical Industry and Research and Development (R&D) also falls in this category.
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Since the development of BPOs, with its cost and service effective elements, Global pharmaceutical companies that have grown in terms of their size and global operations, have increasingly looked upon the BPO as a business model to streamline their business operations. In addition, these companies also wish to make use of the BPO business model to devote their maximum internal resources to the core functions involving the development of new pharmaceutical agents. To attain this goal, the global pharmaceutical companies have increasingly begun to use the BPO business model to outsource their core areas of R&D to smaller companies with highly specialized capabilities.

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Basket Model BPO

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One specific area of this research involves the feasibility of utilizing the basket model form of outsourcing the services of the global pharmaceutical companies to the Middle East. A basket model BPO involves the packaging of various multiple and diverse areas of business services and outsourcing them in a combined form to a single service provider. This form of BPO approach has its own share of benefits. The basket model represents a very cost-effective model for outsourcing business services and also enhances the streamlined approach to management. However, one important challenge that the basket model faces is the requirement of a single service provider who will be able to accommodate the diverse service needs of a particular business (Chakrabarty S., 2007, pp.228-229). Hence, when a pharmaceutical company uses the Basket approach of outsourcing, the case becomes even more challenging. ?This form of business is multi-faceted, with diverse production, marketing and research based components. So for an outsourcing service provider to be able to fill in this niche, it will need to combine high level of expertise in various relevant areas to accommodate the requirements of a pharmaceutical company.

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Many international pharmaceutical companies in Europe and as well in America have been eyeing Middle East. The Middle East is considered to be the ??new outsourcing hub lately?, as a destination where they can outsource their periphery pharmaceutical services in the form of a Basket model BPO. However, to carry out the actual outsourcing plan to the Middle East or any other outsourcing destination, it is very important for companies to get a better view of the destination that will serve their needs for outsourcing services. That is the practicability of outsourcing services to a particular destination, the obstacles that may arise regarding the outsourcing and having knowledge on whether the factors that makes a destination attractive is aligned to the needs of the particular company, that plans to outsource its services.

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Outsourcing to the Middle East

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Most of the Middle East nations offer the same appeal and advantages as offered by the other outsourcing green spots: availability of cheap and skilled labor, the time zone that is roughly in league with the world?s three largest economies- Asia, Europe and North America. Moreover, the region?s geographical proximity to Europe and the presence of labor resources that is multilingual adds on to the attractiveness of the region. The boom in investments in the Middle East itself has created more demands for speakers fluent in Arabic. According to an article published by the consultancy A.T. Kearney Inc, in the recent years Middle Eastern nations like the Egypt, U.A.E. and Jordan have made their place in the ?top 20 most attractive outsourcing destination? (Fam, M., 2007).

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In one of the discussions on outsourcing held at the Gitex Conference in Dubai, Ismail al-Naqi, the director of Dubai Outsource zone said, ?if you came to Dubai two years back, you?d hardly hear the people use the word ?outsourcing?, but now even small start-ups think of it before they even start business? he further added, ?lots of international companies have been inquiring for outsourcing. The number of service providers is too few in the market? (Oxford Business Group, 2007).

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