Users still wary of long BPO commitments

Australian organisations are cautious about the considerable compliance risks related to business process outsourcing (BPO), including privacy and data protection, intellectual property rights, and executive accountability, according to a study by IDC. This is the case even though Australian organisations believe BPO can be used as a vehicle to cut back-office costs and in many cases, improve a process. The IDC report is titled Australia Customer Priorities for Business Process Outsourcing Services.

"BPO pilots will drive more new deals in the Australian region and become an important inroad for a BPO go-to-market strategy, as clients are more receptive to pilots before signing long-term, full-scale BPO contracts. This will happen primarily in areas that are considered ripe for outsourcing, such as benefits administration or areas within human capital management," said Aprajita Sharma, research manager for outsourcing and BPO at IDC.

"In North America and Europe, the Middle East and Africa (EMEA), where BPO engagements tend to be more mid to long-term (five to 10 years) contracts are normally signed at the start. However, Australia is seeing a shift toward trial/pilot BPO projects taking precedence," Sharma added.

IDC believes that in 2008 finance and accounting will be the drivers of BPO in Australia with cheque, credit card, and billing processing as the main forms of business. HR will be another driver and consequently, more companies will embark on payroll outsourcing and will most likely combine that with the underlying implementation of the technology component.

Len Rust is publisher of The Rust Report