Profiting from business process outsourcing

Abstract

Companies have successfully used outsourcing for decades to generate savings and allow greater focus on core (essential) business. Outsourcing traditionally noncore (nonessential) yet critical functions to larger service providers is one of the fastest-growing changes in the market today. We refer to this process as business process outsourcing (BPO). Two significant market forces are driving this practice: a growing low-cost white-collar labor pool and automation and codification of best practices. Although the BPO market has been around for more than 40 years, it is only now reaching many companies' radar screens because of the better service levels and cost-savings promise. The two opportunities behind the recent growth of this sector - process modules and offshoring - show enormous promise, and companies musty use them in conjunction to show sustainable savings and, hence, long-term profitability. Future work in this area would involve understanding the definitions, costs, benefits, and risks associated with various service delivery models that service providers deploy, such as a global services delivery model that uses on-site, on-shore and offshore locations and a pure offshore services delivery model.

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