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Who Is Using business process outsourcing (BPO) and How?

11 Comments · Business outsourcing

Don’t be afraid to take a big step when one is indicated. You can’t cross a chasm in two small steps.

The BPO revolution is evolving as we write, but many firms have already pioneered dramatic new ways of utilizing outsourcing to reduce costs, improve competitive position, and introduce new organizational strategies.

The pioneers in outsourcing were predominantly the large, Global 2000 firms that were able to absorb the risks associated with doing business in radically new ways.

Some of the early outsourcing efforts met with modest success and some with disruptive failure.

Key lessons have been learned along the way, and new business models and ways of working together have resulted.

Today, much of the risk has been removed from basic BPO arrangements because of the knowledge gained by buyers and vendors alike.

For instance, executives in firms of all sizes today are familiar with employee leasing and HR outsourcing arrangements.

Firms that offer these services no longer have to spend time in early sales calls educating potential clients about the nature of the services they provide.

Buyers and vendors have co-adapted to one another, and maturity is evident in this niche of the outsourcing industry. BPO is increasingly being recognized as a strategic as well as tactical initiative.

The usual reasons cited for outsourcing a business process (e.g. cost reductions, shedding noncore functions) are being supplanted by strategic benefits in even the most mundane business processes.

For example, Brooks Automation, Inc., a Chelmsford, Massachusetts, manufacturer of semiconductor production equipment, sells a lot of its products to foreign buyers.

Normally, the company relies on letters of credit (LOC) for payment. Brooks spent a lot of company time correcting discrepancies that often occurred in its LOCs.

To reduce the time it spent managing and tracking LOCs, Brooks decided to outsource the responsibility to ABN Amro Bank, a leader in trade finance, which now handles most of Brook’s LOC activities.

Brooks reports that the relationship is successful, saving the firm time and expense. More important, this operational efficiency has become strategic, enabling Brooks to pursue both higher-risk deals and a greater volume of business. The risks to its cash flow have been mitigated by its outsourcing arrangement with ABN Amro.

Some of these themes have become fairly commonplace and have developed a large base of popular writing and discussion around them. Some of these more common themes are as follows:

? Onshore, offshore, and nearshore outsourcing
? HR outsourcing
? Call center and help desk outsourcing
? Payroll and benefits outsourcing

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