Business Process Outsourcing Market Research Articles

The strategic choice of contract types in business process outsourcing

PurposeHow to determine the appropriate contractual structure for an outsourcing relationship has been a major theme in the business process outsourcing (BPO) literature. Drawing on transaction cost economics, this study aims to examine how anticipated coordination and adaptation costs in a BPO relationship affect the choice of contract types. Specifically, this research categorizes contracts types (fixed-price, time and materials and hybrid contracts) based on levels of contract design comprehensiveness and flexibility to change.Design/methodology/approachThe research setting is the BPO for a focal firm, involving a contractor. Data from 153 US companies are collected using a structured questionnaire on senior executives of functional areas of marketing, IT and finance. Hypotheses were tested using ordered probit model.FindingsThe results show that maturity is negatively associated with anticipated adaptation costs, while modularity and IT detachability are negatively related to anticipated coordination costs. Furthermore, adaptation costs have a direct impact on the choice, whereas the anticipated coordination costs do not have a significant direct impact on contract choice. The strength of adaptation costs' impact, however, is significantly reduced when coordination costs are high.Originality/valueThis study explicitly examines the role of anticipated coordination and adaptation costs in shaping the strategic choice of contract types in the BPO market. By differentiating the two types of anticipated transaction costs, this research enables a better understanding of the dynamics between transaction characteristics, anticipated transaction costs and contract types in complicated relationships such as BPO relationships.

‘From boom to where?’: the impact of crisis on work and employment in Indian BPO

This article locates Indian business process outsourcing (BPO) within the global supply chains of business services delivery and an international division of service labour. It acknowledges the BPO market's essential dependence on demand from lead firms in the United States and United Kingdom. Drawing on a conceptual synthesis of the Global Commodity Chain, Global Value Chain and Global Production Network frameworks, the article examines the impact of 2008's financial crisis on employment, work organisation and the experience of work in Indian BPO. Employer/industry sources and employee interviews reveal reconfigured local labour market dynamics, tightened work discipline, an extensification of working time, work intensification and unprecedented growth in job insecurity. Such changed characteristics suggest a watershed that raises questions concerning the sustainability of models of BPO work constructed in pre‐crisis years.

Business Process Outsourcing Studies: A Critical Review and Research Directions

Organizations are increasingly sourcing their business processes through external service providers, a practice known as Business Process Outsourcing (BPO). Worldwide, the current BPO market could be as much as $279 billion and is predicted to continue growing at 25% annually. Academic researchers have been studying this market for about 15 years and have produced findings relevant to practice. The entire body of BPO research has never been reviewed, and this paper fills that gap. We filtered the total studies and reviewed 87 empirically robust BPO articles published between 1996 and 2011 in 67 journals to answer three research questions: What has the empirical academic literature found about BPO decisions and outcomes? How do BPO findings compare with Information Technology Outsourcing (ITO) empirical research? What are the gaps in knowledge to consider in future BPO research? Employing a proven method that Lacity et al. (2010) used to review the empirical ITO literature, we encapsulated this empirical literature on BPO in a way that is concise, meaningful, and helpful to researchers. We coded 43 dependent variables, 152 independent variables, and 615 relationships between independent and dependent variables. By extracting the best evidence, we developed two models of BPO: one model addresses BPO decisions and one model addresses BPO outcomes. The model of BPO decisions includes independent variables associated with motives to outsource, transaction attributes, and client firm characteristics. The model of BPO outcomes includes independent variables associated with contractual and relational governance, country characteristics, and client and supplier capabilities. Overall, BPO researchers have a broad and deep understanding of BPO. However, the field continues to evolve as clients and suppliers on every inhabited continent participate actively in the global sourcing community. There is still much research yet to be done. We propose nine future paths of research pertaining to innovation effects, retained capabilities, environmental influences, global destinations, supplier capabilities, pricing models, business analytics, emerging models, and grounded theory development.

The perceived benefits of business process outsourcing

Purpose – The purpose of this paper is to provide an in‐depth analysis of the benefits senior management associate with business process outsourcing (BPO) and how these benefits are valued against each other.Design/methodology/approach – A quantitative empirical study of the 200 largest banks in Germany was conducted: 218 senior managers from 126 different banks responded giving a response rate of 36.8 per cent. The answers were analysed using the partial least squares method (PLS).Findings – The quantitative analysis shows surprising findings. A remarkable one is that there is a significantly higher value associated to the programmability of cost in a BPO case than to actual cost savings. This implies that the BPO market gained in maturity and that banks are much more critical to the marketing statements of outsourcing service providers than in previous years.Research limitations/implications – This paper supports the case for a more detailed analysis of the benefits associated with BPO. Although it is e...

Offshore Business Process Outsourcing (BPO) in Transition Economies: Comparative Analysis between China and Malaysia

The rapid spread of outsourcing as a business model has ‘revolutionized’ the way that business is carried out and the way that management tasks are performed in a number of ways. With the process of globalization, many MNCs have contracted most of their non-core functions to service provider from developing countries due to low-cost labor recently. In particular, more and more MNCs considering shifting the entire business lines to Asian to gain competitiveness over cost and other advantages. In the past decade, a quite number of developing countries have emerged with world-class infrastructure and business environment for outsourcing. Malaysia is one of them who has dedicated herself into BPO market and now is one of leading country in BPO market in South East Asia. Its market share is just behind China and India. The study based on theoretical and empirical model developed and proposed by other researchers from this field to analyze the outcomes which come from primarily questionnaire survey and interview. This research focuses on comparing and analyzing the three important aspects (Country infrastructure, Human expertise and resources and Cultural issues) of elements that motivate MNCs for offshore BPO. In addition, an evaluation of the impact of emergence of Malaysia in BPO market on China also discussed.

Delivering on the Vendor's Value Proposition: Business Process Outsourcing at EFunds

EFunds Corporation is the third largest business process outsourcing (BPO) provider in India. Specializing in the financial services, retail and telecommunications industries, EFunds offers financial services, customer services and transaction intensive applications. In early 2005 EFunds was assessing how it could garner a larger share of the growing offshore BPO market. EFunds management was focusing on honing three distinctive competencies: robust IT support, business process expertise, and its unique customer qualification methodology. But to really grow its business EFunds also needed to help customers recognize how BPO could make them stronger.

Profiting from business process outsourcing

Companies have successfully used outsourcing for decades to generate savings and allow greater focus on core (essential) business. Outsourcing traditionally noncore (nonessential) yet critical functions to larger service providers is one of the fastest-growing changes in the market today. We refer to this process as business process outsourcing (BPO). Two significant market forces are driving this practice: a growing low-cost white-collar labor pool and automation and codification of best practices. Although the BPO market has been around for more than 40 years, it is only now reaching many companies' radar screens because of the better service levels and cost-savings promise. The two opportunities behind the recent growth of this sector - process modules and offshoring - show enormous promise, and companies musty use them in conjunction to show sustainable savings and, hence, long-term profitability. Future work in this area would involve understanding the definitions, costs, benefits, and risks associated with various service delivery models that service providers deploy, such as a global services delivery model that uses on-site, on-shore and offshore locations and a pure offshore services delivery model.