The line between BPO and BPaaS to blur

by CXOtoday News Desk    Oct 18, 2012

bpobpaasThe boundaries between platform business process outsourcing (BPO) and business-process-as-a-service (BPaaS) are gradually diminishing, according to a new report by research firm Ovum. According to the research firm, BPaaS concept appears to be a logical evolution of cloud services. And within 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. In fact, most marketing messages are reminiscent of the early hype around cloud services,” said Thomas Reuner, Ovum principal analyst, IT Services.

He added that any assessment of cloud services and those 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 should be discussed in the context of balancing cloud computing with the complexities that buying organisations currently face.

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 an application – mostly an ERP, 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. For buyers, platform-based BPO leverages economies of scale, drives process standardisation and improves quality through automation,” Reuner explained.

Reuner believes 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.

Tags: BPO, BPaaS, SaaS, ERP