Accenture's clients are moving from IT outsourcing to business process outsourcing (BPO) in their quest for enterprise-wide business transformation, according to Marty Cole, managing partner for Accenture's global outsourcing business. "Our clients gain the most value when we can team with them to achieve rapid and sustainable improvement in their business performance," he explains.
While Accenture saw a "continued demand for large IT outsourcing initiatives," the market for BPO "is exploding." He reports BPO is enjoying "a much greater take up as organizations try to find new areas for efficiency."
Accenture sees the outsourcing value chain moving from IT outsourcing to application management then on to BPO. The final step at the top of the outsourcing pyramid is business transformation outsourcing - a program to transform the way an organization works.
Companies Now Ready to Cross BPO Threshold
Human resources (HR), finance and accounting, and eLearning are the BPO areas where executives tried to "drive greater improvements in 2001," Cole continues. Customer relationship management is another process that received such attention as companies attempted to improve their call center operations with better processes and improved technology.
Outsourcing is "very popular" today and will be throughout this year as companies navigate through the shoals of a slower economy. Outsourcing allows companies to transform non-core processes into predictable cost streams. In addition, Cole says companies that have successfully outsourced their infrastructure are now comfortable with outsourcing their non-core business processes. "They are ready to cross the BPO threshold," he says.
In addition, BPO's use of labor arbitrage-employing highly skilled but much more cost effective labor in foreign countries-makes BPO particularly attractive in the current economic climate. Companies that used IT developers in India, the Philippines or Russia are now ready to expand their role into BPO. Labor arbitrage has become a key component of BPO's current success.
This year Cole predicts the pace of large BPO contracts will pick up. He expects the outsourcing world will see more BPO, Business Service Provider (BSP) and ASP contracts than IT deals in 2002.
And cost will fall from its number one perch as the driving force to outsource. "As the economic environment changes and there are more and more BPO success stories, we will see more interest in BPO outsourcing models to help companies improve their overall position in the marketplace," says Cole.
Business transformation outsourcing is gaining popularity as companies strive to grow their businesses." Only a small number of buyers are prepared to embark on such an all-encompassing program," he notes.
All in all, Cole believes "this is an exciting time to be in the outsourcing business."
Lessons from the Outsourcing Journal:
- BPO, BSP and ASP transactions will outnumber IT deals in 2002.
- Companies who have experienced success with IT outsourcing are now comfortable to try BPO, especially in the current economic climate.
- Business transformation outsourcing achieves the greatest value because it focuses on enterprise-wide business improvements, using outsourcing as an enabler.
- Cost will fall from its number one spot this year and next as growth and efficiency become more important.