Benefits and Limitations of Bpo

Topics: Business process outsourcing, Management, Business process Pages: 2 (557 words) Published: October 2, 2010
Benefits and limitations of bpo

An advantage of BPO is the way in which it helps to increase a company’s flexibility. However, several sources[which?] have different ways in which they perceive organizational flexibility. Therefore business process outsourcing enhances the flexibility of an organization in different ways. Most services provided by BPO vendors are offered on a fee-for-service basis[citation needed]. This can help a company becoming more flexible by transforming fixed into variable costs.[4] A variable cost structure helps a company responding to changes in required capacity and does not require a company to invest in assets, thereby making the company more flexible.[5] Outsourcing may provide a firm with increased flexibility in its resource management and may reduce response times to major environmental changes[citation needed]. Another way in which BPO contributes to a company’s flexibility is that a company is able to focus on its core competencies, without being burdened by the demands of bureaucratic restraints.[6] Key employees are herewith released from performing non-core or administrative processes and can invest more time and energy in building the firm’s core businesses.[7] The key lies in knowing which of the main value drivers to focus on – customer intimacy, product leadership, or operational excellence. Focusing more on one of these drivers may help a company create a competitive edge.[8] A third way in which BPO increases organizational flexibility is by increasing the speed of business processes. Using techniques such as linear programming can reduce cycle time and inventory levels, which can increase efficiency and cut costs[citation needed]. Supply chain management with the effective use of supply chain partners and business process outsourcing increases the speed of several business processes, such as the throughput in the...
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