Trendspotting
How is the downturn driving business process outsourcing?
In our ‘Trendspotting’ section we take a brief analytical look
at a major communications industry trend. Here, we look at how the
credit crunch has affected the arguments for and against business
process outsourcing.
As we emerge from the grip of a tough but mercifully short
recession, it’s clear once again that companies will often turn to
business process outsourcing (BPO) as a strategy for minimising
costs during tough times.
In 2008, corporate UK spent 12% more on IT outsourcing and 6%
more on BPO than it did the previous year, according to a report
issued by the National Outsourcing Association (NOA).
NOA chairman Martyn Hart argues that outsourcing has long been
treated as a cost-saving mechanism by organisations of all kinds.
‘In times of economic turbulence it’s not surprising that the
outsourcing industry continues to grow,’ he says.
Interestingly, the NOA detected that the recent recession may
have made corporate UK reluctant to look offshore for outsourcing
contracts in favour of home grown providers. ‘The UK economy is
weakening and with the value of the pound continuing to fall,
companies will not see the same level of cost savings from
offshoring that they’ve experienced in the past,’ says Martyn.
‘Also, patriotic sentiments and rising unemployment will encourage
UK organisations to seek out areas within the UK in which to site
new outsourcing business. Whether this is economically sound or not
depends entirely upon each situation.’
‘Service providers in the IT and communications space should
look at BPO as a strategy with benefits other than just
cost-related ones,’ advises Chris Ducker of Virgin Media Business.
‘Whether you’re looking to achieve benefits for your own
organisation, or for benefits to pass onto your customers by acting
as their outsourcing provider, you need to consider how BPO can
deliver a useful measure of added flexibility as well as cost
control. The recession proved how important it is to be able to
react fast to market changes, and scale your business according to
demand. Having the right outsourcing partner can allow you to be
agile and responsive. You need to be flexible and you need the back
up of a partner equally able to flex with your needs. There are
network implications here too, since you need to connect to the
flow of data wherever it may be. Networks are out of your direct
control if you’re looking at a virtualised business process model,
for example.’
Further reading
The National Outsourcing Association is the UK’s only
outsourcing trade association and widely regarded as a centre of
excellence
http://www.noa.co.uk/
ComputerWorldUK.com reports on global BPO and how it may be
shaping the future of outsourcing
http://www.computerworlduk.com/community/blogs/index.cfm?blogid=12&entryid=2089
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external internet sites.
