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Business Process Outsourcing
As enterprises grasp the benefits of outsourcing big chunks of the business, the role of IT looms ever larger in planning and execution
THE WRITING IS ON THE WALL. IF YOUR COMPANY hasn't outsourced an entire business process yet, bodies and all, there's a good chance it will in the near future. According to IDC, worldwide spending on BPO (business process outsourcing) will grow to $641.2 billion by 2009, from $382.5 billion in 2004. Moreover, in the future, BPO won't be limited to today's typical segments, such as customer care and logistics; IDC expects procurement and training to grow in double digits annually. And companies that typically outsourced discrete processes, such as payroll, will increasingly outsource larger chunks of the business.
Does BPO simply fall under the heading of yet another factor outside of ITs control? Or is there a definite role for IT in the BPO process from deciding which functions to outsource to choosing a provider, including all the negotiations, maintenance, and transitions that ensue? Think of it this way: IfIT doesn't have a seat at the table, it risks calamitous fallout from business decisions that gloss over technology implications.
Just about everyone InfoWorld spoke with, including major BPO vendors, their customers, and BPO analysts, agree that IT's role in the BPO process is increasing. "For every $100 spent on BPO in 2003, approximately $12 was spent, on average, on IT related services," says IDC's Vipul Bhargava, author of "Who Let the Processes Out," a report on the impact of BPO on IT. "We expect the IT services component to rise to $20 by 2008. If organizations spend more money on the IT component of BPO, then ITs role in BPO will inevitably increase as well."
Jack Caffey, managed services BPO solutions director at Hewlett-Packard, agrees. "Two years ago we might walk into an RFP meeting with a potential client and have to insist on speaking with the IT manager. The finance guy would say, ? thought you guys would handle all that." That doesn't happen very much anymore. With all the questions around security, terms, and future strategy, they understand that IT has to know how we're doing things."
What Should Be Outsourced?
One critical reason...