Managing E-Collaboration Risks in Business Process Outsourcing

Abstract

A marked development in the last decade has been the growth of “virtual organizations” (or “extended enterprises”), where a network of service supplier and vendor firms cooperates to create customer value. One form of cooperation is described as business process outsourcing (BPO). A business process involves several interrelated activities performed with the goal of generating customer value. Because of the growth in e-collaboration tools, it is now possible for firms to outsource even core business processes to external vendors. Examples of processes typically outsourced include logistics, customer support, human resources, and back-office accounting functions. BPO and the value networks created by vendors and purchasers hold the promise of substantial business benefits associated with specialization and scale. These include reduced costs, greater business flexibility, and higher service quality. According to the Gartner Group, the world market for BPO services is likely to increase from $100 billion in 2002 to $173 billion by 2007(Gartner, 2004).