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John K. Halvey defines outsourcing in his book “Business Process Outsourcing”, as: “the management of one or more specific business process or functions (e.g., procurement, human capital, accounting, asset, or property) a by third party”.
The issues encountered by customers and vendors entering into BPO transactions run the gambit-from the more traditional outsourcing issues (e.g., defining scopes, allocating responsibilities, negotiating fees) to issues that are evolving as the BPO market matures (e.g., benchmarking, gainsharing, integration). The complexity of the issues that arise in connection with a BPO transaction very depending upon the types of services outsourced.
According to a recent study sponsored by PricewaterhouseCoopers, 46% of the individuals surveyed said that during the last three years the importance of BPO has increased at their organizations. For the customers, the outsourcing of business processes would allow the customers to focus on its core competencies, while having a qualified third party focus on and add value to non-core processes.
While the BPO market is expected to experience significant growth in the next three to five years, the concept of outsourcing some business processes is not new to most companies. The Global Top Decision Makers StudySM indicated that 63% of decision makers surveyed (out of a pool of 304 companies in 14 countries) said that their companies have already outsourced one or more business processes worldwide to external service providers.
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