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Business Process Outsourcing today:
A completely normal business sector
Over the last ten years, Business Process Outsourcing, which began as an experimental discipline practiced by only a few pioneering companies, has evolved into an established business sector. The outsourcing of business processes is now a normal market consisting of numerous client companies whose processes are run and managed externally, and a large number of outsourcing providers that work at a level of efficiency that would have been unimaginable ten years ago.


Experts believe the boom in outsourcing is the result of two developments:

• Process standardization: Companies have invested a great deal of energy over the past few years in the standardization of their internal processes. In other words, precisely defined work processes have been created, for which external providers are now able to offer tailor-made solutions.
• Industrialization of IT systems: Information technology has also undergone major developmental advances over the last few years, and today's IT solutions are created in an environment that fulfills industrial standards of reliability, consistency, and networking capability for achieving efficient process solutions.

Standardization has given companies that outsource the ability to compare prices and service performance. Moreover, process-focused thinking makes it possible to subdivide company processes in a manner that enables various providers to operate their services simultaneously. At the same time, competition among providers generates pressure to innovate, thereby causing such companies to consistently strive for greater process efficiency.

However, it would be a mistake to view Business Process Outsourcing as a cure-all that can make a company successful overnight. Instead, experts view it as an option for boosting a company's competitiveness on the global level.

Successful outsourcing projects require thorough preparation and a serious evaluation of which processes one should hand over to an external provider. Clarification of this issue in particular helps to defuse two frequently voiced criticisms of BPO.

• Service description: The scope of services to be provided must be precisely defined in service level agreements, as this ensures there'll be no unpleasant surprises for either the client or the BPO provider. The efficiency of the processes a BPO offers is largely related to the level of standardization achieved. If additional services beyond the above-mentioned scope are required, they will be billed separately – and it's important to make sure such stipulations are clear from the beginning.
• Dependency: Outsourcing invariably leads to a loss of control on some level. Ultimately, however, the identification of the processes to be outsourced also clarifies a company's strategic focus. Experts all agree that companies that outsource should always retain control over their core business processes, which in any case are not as easy to standardize as those for payroll accounting or procurement, for example.

Developments over the last few years show no indication of a trend reversal in the main areas where BPO is employed (IT, procurement, logistics, HR, finance and accounting). In the end, the benefits of a carefully constructed and precisely defined outsourcing system more than outweigh the risks of dependency.