BPO Isn’t What It Used to Be Business process outsourcing is not new; some leading edge relationships are more than a decade old. BPO can be defined simply as “Contracting with an external organization to take primary responsibility for providing a business process or function”.

BPO goes further than technology infrastructure or even applications. The outsourcing provider takes primary responsibility for ensuring that the process works, interfaces effectively with other company functions, and delivers the outcomes intended.

Over the years business process outsourcing has become wrapped in conventional wisdom. Traditionally, organizations applied simple rules about when to use BPO:

	Outsource non-core activities,
	To niche providers who offer best practice processes,
	In order to achieve cost savings, and
	Improve management’s focus on more strategic issues.

Today, these rules no longer apply. The definition of business process outsourcing hasn’t changed since its inception, but its potential reach and impact have altered significantly. The BPO universe is expanding. Today, executives use BPO to meet a diverse set of objectives, from tactical to strategic. Some still contract out narrow processes to achieve cost savings. But others have begun to use BPO for very different goals. They are using it to drive consistent management practices through global operations, to start up new operations quickly, to tap new sources of revenue, and to catalyze organizational change.

Leaders are:

	Raising the bar. Most often, organizations intend to achieve other objectives—including highly strategic ones—along with cost reductions Only 21 percent of the firms from the study were aimed at cost reduction alone.
	Outsourcing strategic as well as tactical processes. As they feel increasingly comfortable with strong relationships and shared control, executives are working their way up the food chain to outsource more strategic processes. Only 35 percent of the organizations in the study are outsourcing processes of low strategic value, whereas 65 percent are outsourcing processes of medium to high strategic value.
	Outsourcing several processes to a single supplier. Although 95 percent of total current business process outsourcing spending is still for discrete processes such as billing or payroll,1 organizations are increasingly asking a single provider to handle multiple processes to simplify relationships and improve integration. Sixtyone percent of organizations from the study used a single provider to handle multiple functional processes.
	Pushing the operational envelope to drive value. Organizations are looking further afield for suppliers—in some cases tapping providers in India, the Philippines, and central Europe for inexpensive labor. They’re willing to share service centers—even with direct competitors—to increase scale efficiencies beyond what any firm alone could achieve. And, they’re embracing netsourcing— outsourcing applications that run on the Internet—to get the benefits of self-service processes and to speed up technology roll out. These emerging opportunities contribute to a BPO Big Bang—a radically different and expanded notion of the potential for value.