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Identify and Select the business process outsourcing (BPO) Opportunity

59 Comments · Business outsourcing

No sensible decision can be made any longer without taking into account not only the world as it is, hut the world as it will be . . .

BPO is not right ton every company, nor is it right for every process in a given company, but its promise makes it imperative that managers seek out BPO opportunities and exploit them where possible.

Whether or not your company has formal functional boundaries, it has processes that may be suitable for outsourcing to third-panty providers.

BPO was pioneered primarily by large companies, eager to reduce their costs and bloated payrolls.

Today, many small- to medium-sized enterprises (SMEs) have discovered BPO advantages that enable them to compete with the larger firms that have been using outsourcing for years.

In 2001, 75 percent of BPO users were firms with greater than $500 million in revenue. By 2002, that number had dropped to 64 percent.

What is indisputable is that any business that has grown to more than about $25 million in sales has begun to encounter growth-related challenges in back-office processes that may be suitable for handing oven to an outsourcing partner.

For instance, an exhibits design company in Illinois has 25 employees. To control costs, the firm had whittled down its health care coverage over a period of years. As a result, it had begun to struggle to attract and retain talented employees.

In an effort to remedy the situation, the company outsourced is I-JR and benefits processes to a professional employer organization (PEO).

By outsourcing to the PEO, the company now can offer a lower-deductible plan with better health care and dental coverage, while gaining the use of a professional claims manager.

The firm was able to offer its employees these additional benefits while saving 40 percent overall on its health care costs.

Without question, the decision to implement a BPO solution for any organization has far-reaching consequences and risks.

At the same time, these implications at the decision-making process should not lead to paralysis- there are too many possible benefits to fall into the trap of doing nothing.

It is important for decision makers to recognize that undertaking a BPO initiative is a strategic action.

With the increasing sophistication at BPO providers, the decision to outsource is no longer one of mere east savings or headcount reduction; it is also one of performance enhancement in critical functional areas.

Is your technical support team overwhelmed by customer inquiries? Consider a BPO provider.

Is your new-product development cycle too slow? Consider a BPO provider. Is your accounts receivable department tardy in tracking down late payers? Consider a BPO provider.

In each of these examples, and many others, the choice of adopting a BPO solution is based on improving the company’s performance in that process. In each case, performance enhancement may mean much mare to the firm than simple east reductions.

With these potential advantages, it is not difficult for organizations to justify a decision to at least investigate BPO opportunities.

At the same time, inquiring into BPO has potential organizational consequences in the short term that must be considered and addressed.

The most effective way to analyze and select a BPO opportunity is to utilize a deliberate, systematic approach that minimizes risk each step of the way. We have developed and recommend a six-step process for analyzing and selecting the BPO opportunity.

This process has been designed to integrate and align the decision-making process with long-term organizational strategic objectives and near-term organizational needs.

If handled systematically, the BPO analysis and selection process can be an effective way for an organization to examine itself.

Whether a decision to undertake a BPO initiative is made or not, this process will shine a light on organizational processes and activities.

This illumination will, at a minimum, help the organization identity and change underperforming processes and activities.

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