HOME About Us Services People FAQs Contact Us Jobs Member Area News Categories Outsourcing Trends Headlines Business Process Outsourcing Overhyped? Business Process Outsourcing Overhyped?     Business Process Outsourcing   Business Process Outsourcing (BPO), in which firms turn over many back-office functions to outside vendors, has been hyped as one of the next big things in IT, but research firms warn that cost savings garnered through such deals may not be all they're made out to be. Citing its recently released report, "BPO's Fragmented Future," Forrester Research said "firms looking to outsource core business processes like human resources, and finance and administration to gain cost savings will not find a single vendor that can manage such complex offerings." Forrester said that while it believes the BPO market will grow to $146 billion in 2008, the marketplace will fragment as vendors focus on individual BPO segments like simple bulk transactions, broad shared services, high-volume vertical processes, and niche vertical applications. Noting that it surveyed 82 senior business and IT executives and held in-depth interviews with 12 early BPO adopters, the Forrester said many organizations experimenting with BPO reported inflexible contracts, difficulty managing vendors, and a lack of performance metrics. "Although some firms show BPO savings, vendors overstate their current offerings," John C. McCarthy, Forrester Group director, said. Research firm Gartner, noting that firms are most likely to utilize a combination of delivery models as they move toward BPO, suggested that those interested in the model not ignore the possibilities of offshore insourcing to complement outsourcing. In offshore insourcing, Gartner explained, firms set up their own offshore captive "shared service centers," allowing them to retain control while providing their own data security. "The rewards and risks of offshore BPO are just beginning to be understood," said Sujay Chohan, research vice president for Gartner. "As enterprises and service providers evolve, it has become clear that there is no right model for a given company. Instead, enterprises will use parts of a model or a combination of models as they begin to explore and iron out the issues around sending business processes offshore. No enterprise will fully insource or outsource offshore. Most will use a combination of delivery models as they climb the learning curve to BPO." More.. Date Published : Tuesday, July 29, 2008

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