BusinessProcessOutsourcingManagementIssues.doc - Business Process Outsourcing Management Issues Innovation is an essential and enduring aspect of any

BusinessProcessOutsourcingManagementIssues.doc - Business...

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Business Process Outsourcing Management Issues Innovation is an essential and enduring aspect of any human enterprise. Management of contemporary organizations is no exception. Amidst globalization and technological breakthroughs, the industrial economy that dominated the 20th century is slowly but steadily giving way to an information or knowledge economy. This new economy is characterized by a rapidly globalizing world, radical technological advancements, hyper competition, ever-changing business and management models, and associated constant change and uncertainty. Revolutionary technological developments in information technology, communications, production, and infrastructure have made it possible to produce goods and services in one part of the country, region, or indeed the world, for consumption in another part. Accompanied by these changes, business process outsourcing (BPO) has quickly emerged as a key business strategy in the last decade or so. More than half of Fortune 500 companies are outsourcing and off-shoring to varying degrees, and others are actively considering them. According to Gartner, a research consultancy firm, the worldwide BPO market was worth $132 billion in 2006 (Singh, 2006). The most outsourced services included vertical industry operations, customer relationship management (CRM), supply management, human resource management, finance and accounting, payment services, and administration services. The main objectives of companies that considered BPO were to focus on business functions that helped to create competitive advantage, reduce costs, and improve service levels. BPO is also very controversial. While business leaders heap praises on BPO’s merits and stress the necessity of BPO as a key sustainable competitive advantage, critics, including many political leaders and trade unionists, blame it for loss of jobs, especially when it includes off-shoring. BPO is not just a business strategy but encompasses broad economic, technological, and social aspects. While it is underpinned by technical innovations, its success depends on how the social and human aspects are managed. Outsourcing essentially involves redefining the boundaries of the organization. It can range from peripheral activities such as security and cleaning to major organizational change with significant impact on organizational structure, employee skills, and performance management. If managed appropriately, BPO can result in significant performance improvements and productivity gains and offer strategic and competitive advantages to the organization.
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As with any other management concept, organizations need to pay careful attention in evaluating whether out-sourcing is beneficial and if so, in what areas. Once a decision to outsource is made, selecting an appropriate vendor and defining the relationship and performance parameters need to be carefully managed. Failure to manage the out- sourcing process can result in serious consequences, such as decline in revenue, customer backlash, and employee demotivation. The success of outsourcing is in its
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  • Summer '19
  • SABIO
  • Management, Business process outsourcing

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