BPO management set to be a boon for channel
- 18 December, 1998 13:20
Business process operations (BPO) management is expected to be a major cashcow for service organisations, and the channel is already setting itself for a share of the pie.
But analysts warn they'll have to let go of their technology-centric attitudes. IDC Australia figures estimate BPO could be worth as much as a third of the $6 billion total outsourcing market within five years, and new offerings in the field are already being delivered to market by systems integrators and outsourcers.
EDS last week joined the ever-burgeoning list of providers getting into BPO, launching a range of offerings focused on back-end processing functions for banks and insurance companies.
Aspect Computing is already teaming with Citibank, Global Customer Solutions and Manpower Services to provide a range of back-office outsourcing services, while IBM Global Services Australia (IBM GSA) is set to launch business process outsourcing services next year, according to Philip Wing, general manager, strategy and business development.
Merv Langby, IDC Australia senior consultant, services, said BPO encompasses the outsourcing of any business function with an IT component to a service provider. IDC differentiates BPO from general IT outsourcing, which only incorporates the technical component.
"A neat way of conveying the difference is that if an organisation outsources an IT department in its entirety, it includes the transfer of IT staff," Langby said.
"But with BPO, the outsourcing will also involve the transfer of staff from areas like human resources, marketing and logistics."
Langby identifies organisations like Andersen Consulting, IBM GSA, EDS and CSC as those best placed to offer BPO services because their strategies go beyond technology.
"They have all recognised progressively over the last three to five years that they have to present value propositions based on industry and business knowledge and not limit their offerings to purely technology-based solutions," he said.
However, Langby said BPO will not be the exclusive domain of the outsourcers. He expects organisations with expertise in key areas of competency will also have an opportunity.
"There is room for others who have specialised expertise and long-term experience in various business functions, like a Citibank or American Express in banking or a TNT in logistics, for example."
Senteq has been offering BPO services for more than two years already, according to Jonathan Fisk, the company's managing director.
"What we do for our customers is provide processes and people to drive those processes," Fisk told ARN. "Fundamentally, that is our core business."
Senteq has provided procurement services for several years, and has now begun developing BPO offerings that involve management of Internet/intranet technologies.
Long term, Fisk expects BPO to be a major contributor to Senteq's profits as hardware margins continue to shrink and services instead form the base of the company's revenues.
But Peter Kazacos, managing director of Kaz Computer Systems, is less convinced of the merits of BPO.
"Companies want to outsource their IT systems and are looking to diversify how they outsource, but they want to keep their business functions in-house, because that's their competitive advantage," he said.
Langby acknowledges that companies may be more reluctant to outsource their business processes, but . . . "it's all about the corporation deciding what its core competencies are", Langby claimed.