Essentials Of Business Process Outsourcing

HR Magazine, July, 2005 by Leigh Rivenbark

Essentials Of Business Process Outsourcing

By Thomas N. Duening and Rick L. Click John Wiley & Sons, Inc., 2005

230 pages, List price: $39.95 ISBN: 0-471-70987-5

This handbook moves readers through the procedures of business process outsourcing (BPO), from identifying initial outsourcing opportunities to managing relationships with vendors.

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Of particular interest to HR professionals is the book's recognition that outsourcing includes human factors such as coping with job losses and reassignments, reassuring concerned staffers, and training employees on the new business format.

Steps toward outsourcing include the following:

* Identifying and selecting the BPO opportunity. Outsourcing can save money, reap the benefits of outside expertise and improve productivity, but you have to consider whether outsourcing is what you need. The authors detail how to set up a BPO project team to analyze current business and determine how processes really work. This step examines whether functions are candidates for outsourcing.

You can create a model of a BPO project, including costs, risks and expectations. The book also outlines how to make a formal business case for outsourcing.

* Identifying and managing costs. This section covers whether you need a consultant to help you implement outsourcing. It also looks at the costs of evaluating requests for proposals and maintaining a relationship with a vendor. The authors discuss how outsourcing initially may lower productivity as the company loses jobs or as employees' fears cause their productivity to dip.

Among other measures, the authors recommend monitoring employees' knowledge and understanding of outsourcing, their morale, and their capacity for change.

* Selecting a vendor and writing a contract. Readers get a primer on establishing the qualifications a vendor needs, issuing a request for information, evaluating vendors' responses, and interviewing vendors by phone and in person.

Considerations in drafting an outsourcing contract include intellectual property issues, dispute resolution procedures and contract termination guidelines.

* Managing BPO-related change. This section of Essentials of Business Process Outsourcing covers how to create a project management plan, clarify leaders' roles, overcome obstructionists, handle job changes and create a "defensible" reduction-in-force plan. The authors also prepare readers for potential risks such as culture clashes with the vendor.

* Infrastructure considerations and challenges. Discussed here are subjects such as deciding whether to use your own or the vendor's systems, ensuring compatibility and security, and developing systems training.

* Assessing business risks and mitigation strategies. "Change management is an HR issue," the authors emphasize as they look at force reductions, labor laws and labor relations in outsourcing. They give tips on ways to identify whether the vendor has solid, professional HR for its own employees.

Rick L. Click, senior director of global technology for PayPal, Inc., has helped Fortune 500 firms re-engineer their businesses. Thomas N. Duening is president of consulting and research firm INSYTE Business Research Group.