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Boundaries between IT outsourcing and BPO are becoming blurred: Ovum

By Zafar Anjum, MIS Asia
October 17, 2012 02:49 PM ET

MIS Asia - What is the potential impact of cloud on propositions of platform business process outsourcing (BPO)? Will it develop and merge into business-process-as-a-service (BPaaS)? According to research firm Ovum, the answer is yes.

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In a new report, Ovum finds that the BPaaS concept appears to be a logical evolution of cloud services, in that standardised processes have been wrapped around software-as-a-service (SaaS) offering.

"In the narrower context of BPO, Ovum believes that BPaaS is a future vision that is not yet resonating with buying organisations,' said Thomas Reuner, Ovum principal analyst, IT Services, and author of the report. "Most marketing messages are reminiscent of the early hype around cloud services."

"Any assessment of cloud services and services adopting cloud components need to be conducted within the wider framework of industrialisation, and the evolution of BPO and the impact of everything-as-a-service (XaaS) on BPO delivery need to be discussed in the context of balancing cloud computing with the complexities that buying organisations currently face," Reuner said.

According to Ovum, the evolution of BPO from the traditional "lift and shift" approach, leveraging labour arbitrage in global sourcing locations, towards platform BPO is best described as a service delivery model in which end-to-end processes - offered as managed services on a highly standardised business platform based on a best-of-breed (often ERP) application - are hosted, managed and maintained by a BPO provider. Global providers are investing significantly in these platforms, and therefore taking greater risk in terms of capex investment.

"This investment does not necessarily equate to traction on the buyer side as the language used does not always resonate with their specific requirements," Reuner explained. "For buyers, platform-based BPO leverages economies of scale, drives process standardisation and improves quality through automation."

"The push towards platforms is increasingly accompanied by a bundling of infrastructure components as part of the BPO contract. Consequently, the boundaries between IT outsourcing and BPO are becoming blurred," he said.

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