Business Process Outsourcing in DACH
Business Process Outsourcing Background
Business Process Outsourcing (BPO) is to be the growth driver in the German IT services market for the years to come even though it may be still in its infancy compared to the BPO markets in the UK or the US.
In the beginning mainly infrastructure such as data centres or desktops was sourced out, followed by applications and, later on, also by business processes.
While so far this has mainly concerned processing services, now step-by-step even complete business processes are externalised.
In the course of the trend towards the reduction of vertical integration, the emergence of the BPO market can be seen as a logical consequence in the outsourcing market.
Know-how and cost optimisation are in the foreground.
In the case of core BPO, process and/or industry skills and process optimisation are key.
The major difference seems to be that for the strategic
business, such as HR management (not only payroll), SCM or CRM, mere IT outsourcing is not suitable: here, only BPO makes sense as the IT should be aligned with the business processes and not the other way round.
Many questions arise concerning this high-potential topic of Business Process Migration / Outsourcing:
- Which types of services provide the best growth potential?
- What is the customers behaviour like concerning BPO?
- What selection criteria apply when choosing a services supplier?
- What does the suppliers offering look like and what can we learn from best practices?
- Which industries are especially attracted to what types of services?
- How do offshore services influence the German BPO market?
- Who are the leading suppliers in the various market segments and, above all, who wins which deal in Germany?
Key arguments for Business Process Outsourcing
The key arguments for BPO are widely similar to those for traditional IT outsourcing/ global-sourcing (i.e., offshoring), but the range is broader - not merely IT but entire processes:
Costs savings, focus on core business, less investments and risks, flexibility and faster time-to-market, service quality improvement, etc.
Suppliers aim at expanding their market potential (from consulting to BPO, from processing to BPO, from IT
outsourcing to BPO) and at increasing profitability.
However, the requested capabilities of a supplier are not the same as with view to IT outsourcing.
segmenting the BPO Market
As the requirements on the suppliers side and the maturity of the market differ strongly, depending on the kinds of services, we strictly distinguish between core BPO and Business Process Services.
Core BPO means outsourcing/ offshoring of responsibility for the entire business process such as:
- Public Utilities
Business Process Services (BPS) refers to:
- Billing Logistics
- Financial Processing
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This article is an extract from the report
"BPO 2004 Germany"/ Pierre Audoin Consultants