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Building a successful relationship in business process outsourcing: an exploratory study

  • Original Article
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European Journal of Information Systems

Abstract

In the past decade, business process outsourcing (BPO) has emerged as an important economic and business issue. Successful offshoring and outsourcing of business processes to low-cost destinations has made BPO a strategic decision. Inconsistencies at the client and service provider levels globally are requiring clients to build competencies in outsourcing management. Clients are further pushing service providers to build capabilities such as business process management and information technology management competencies. A research survey is carried out with European clients to identify the critical competencies of the service provider and clients for building a successful relationship. The survey indicates that the clients’ focus is on BPO outcome delivery for building successful relationship and not so much on the service provider's competencies.

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Acknowledgements

First we acknowledge the European Union for co-funding the research project. We thank doctorate research scholars and the service providers who have helped during the initial phase of development of the survey instrument. We also thank Professor A.K. Jain and Professor A.P. Arora for helping with the survey analysis section of the paper. We acknowledge the efforts made by all the respondents who have taken an interest and filled out the questionnaire. Lastly we are indebted to our research associate Ms. Kalpana Chauhan for providing support throughout this project.

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Authors and Affiliations

  1. Management Development Institute, Information Management, Gurgaon, India

    Sangeeta S Bharadwaj & Kul Bhushan C Saxena

  2. Department of Technology and Innovation, RSM Erasmus Univerity, Rotterdam, Netherlands

    Murthy D Halemane

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  1. Sangeeta S Bharadwaj
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  2. Kul Bhushan C Saxena
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  3. Murthy D Halemane
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Appendix

Appendix

The competencies, business process outsourcing (BPO) outcome, and the relationship have been grouped as follows in the client questionnaire. Some of the items related to the variables that violated the reliability conditions are not included in the following groupings. Responses on the 5-point Likert scale were collected, 1 being strongly disagree to 5 being strongly agree.

Successful relationship

  1. 1

    Renew(ed)/extend(ed) duration of contract/ MOU (memorandum of understanding).

  2. 2

    Extend(ed) scope of existing function or include(d) additional functions for outsourcing.

BPO outcome

  1. 1

    Able to achieve cost advantage.

  2. 2

    Able to reduce function-related personnel.

  3. 3

    Improve function-related service quality.

  4. 4

    Able to improve business performance.

  5. 5

    Able to enforce better function control.

  6. 6

    Service provider/your own unit has performed as per the service-level agreements.

  7. 7

    Service provider/your own unit has even gone beyond the service-level agreements.

  8. 8

    Service provider/your own unit has not fallen short of performance as per the service-level agreements.

Service provider's business process management competence

Service provider/your own unit

  1. 1

    has experience with similar outsourcing functions;

  2. 2

    has excellent functional expertise;

  3. 3

    has capability to improve the function;

  4. 4

    has excellent function transition (migration) skills.

Service provider's information technology management competence

Service provider/your own unit

  1. 1

    has excellent support for business continuity, disaster recovery, data privacy, and security;

  2. 2

    has excellent infrastructure facilities (hardware/software/network);

  3. 3

    has excellent technical competencies.

Client's outsourcing management competence

  1. 1

    A competent team is looking into the outsourcing activities.

  2. 2

    A formal methodology is set up to outsource the function.

  3. 3

    A thorough due diligence for the service provider was carried out by a competent team.

  4. 4

    Contract/ MOU (memorandum of understanding) was negotiated with the service provider with ample flexibility in scope and pricing.

  5. 5

    The contract/ MOU is reviewed periodically during the contract/ MOU time.

  6. 6

    The execution of outsourced function is monitored remotely and regularly.

  7. 7

    The key service level is monitored closely and any discrepancy is communicated.

  8. 8

    Acquiring control on outsourced functional operations through appropriate governance structure.

  9. 9

    Continuous monitoring of service provider's resources and emerging scalability needs.

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Bharadwaj, S., Saxena, K. & Halemane, M. Building a successful relationship in business process outsourcing: an exploratory study. Eur J Inf Syst 19, 168–180 (2010). https://doi.org/10.1057/ejis.2010.8

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  • DOI: https://doi.org/10.1057/ejis.2010.8

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