Role of IT in BPO

* Business Process Outsourcing (BPO) involves transferring responsibility of business processes, such as payroll and transaction processing to third party vendors. Purpose is to take advantage of vendor's economy of scale, knowledge, expertise, facilities and technologies, while reducing costs and maintaining operational excellence. Financial (hidden transition and support costs), security and compliance (lax or non-existant security controls) and service quality (inconsistency) are key BPO risks.

* Strategies for IT executives to help business achieve BPO success.
1) Actively engage business peers
2) Baseline process performance prior to BPO
3) Assist business in selecting vendor and managing relationship
4) Manage BPO governance and uphold vendor performance

* IT can measure the following performance metrics: cost reduction, process performance levels, adherence to schedule and time lines, customer & employee satisfaction and revenue growth. These metrics help to benchmark existing processes before they can be transitioned.

* IT can understand the technical details behind a business process, determine capability of vendor to meet the required level of expertise, assess vendor backup and business continuity capabilities and gauge regulatory and performance risks. IT also has contract management and outsourcing experience to mitigate risks and maximize investment.

* IT can help with the transition based on its experience in timeline and technical implications in transitioning a process to a vendor.

* IT can also serve the governance role, which involves process documentation and training, process transformation, monitoring and communication and contract termination.