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Future Enterprise- Business Process Outsourcing
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| Written by David Hunter Tow |
The outsourcing of IT services to a host of new external providers has been gathering momentum over the last few years, but outsourced business functions are now becoming more diverse including- telecommunications, engineering, financial and public sector processes. For example, India is not only the major provider of outsourced IT services but is poised to become a huge source of engineering and design skills as well as knowledge processing.
Outsourcing benefits include increased flexibility, agility and scalability as well as cost effectiveness. At the same time businesses have become better at measuring and controlling outcomes as well as determining value; realising the strategic benefits of retaining control over core knowledge and business applications by applying secure network access to manage a distributed labour force on a global basis. Cost savings drive the bulk of outsourcing activity where companies are increasingly keen to hand over business processes such as HR Management and accounting as well as computing operations to a third party.
As traditional IT infrastructure technology such as communication networks, software and operating systems management have become commoditised, organisations have become more comfortable with extending their business model to include outsourcing of design and manufacturing, freeing them to focus on their core functions.
Adding to this momentum over the past five years, early adopters have been taking the best-of-breed approach with multi-sourcing agreements and both private enterprise and Government agencies are starting to look offshore for a way of cutting costs and completing work more efficiently through a third party provider.
Outsourcing has becomes even more critical to businesses as new technologies come on stream and each enterprise attempts to gain a competitive edge from the productivity gains of the latest advances. This trend is global with the number of contracts between $US500 million and $US1 billion shrinking, while smaller outsourcing deals worth less than $US20 million are increasing.
In addition, a range of new on-demand services are coming on-stream in which IT departments are hosted by vendors. Such services already include desktop and business application services, while ‘software as a service’ allows enterprises to circumvent licence fees by paying on a monthly/user rental basis.
Future Trends
Business transformation and enhancement processes are increasing as the rate of change in the social, political, technological and business landscape accelerates.
But the longer term trend is clearly towards the outsourcing of high-end knowledge processing- whether in the form of creative software development, sophisticated engineering design or business intelligence services and management.
It is clear that the best minds in the world-regardless of country of origin, are rapidly being drawn into this competitive services environment. There will therefore be a gradual levelling out of both quality and remuneration for these services as national boundaries become increasingly irrelevant
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