Does it make sense to outsource entire business processes to third-party companies? For example, because there is a lack of appropriate competencies or to keep a company's structures lean? For me, this is a classic “yes but question” that requires an independent view from outside. The fact is: There is no general answer to this question. Denn Business Process Outsourcing (BPO) is a strategic and complex corporate decision and should be put to the test.
The reasons for outsourcing business processes can be manifold: Some companies are attracted by the more economically favourable conditions and the opportunity to outsource risks to the contracted service provider. Some companies lack the specialist knowledge required for certain business processes within their own company. Or they are in a growth phase but not yet big enough to provide this knowledge in-house. However, according to my experience, the biggest crux is an astonishing uncertainty as to which business processes should be outsourced in the first place.
Companies that are thinking about business process outsourcing must first know their core business. Surprisingly, more companies are finding it harder than expected.
A few years ago, I took on a mandate for a company. Comprehensive business process outsourcing to a large IT service provider was planned. The core business and associated competencies, on the other hand, should remain in-house. During the analysis, it became clear that the company's core competencies were not reflected enough. Outsourcing traditional support processes to more cost-effective countries also proved to be more complex than expected. By the time I resigned my mandate, the number of processes eligible for BPO had therefore already fallen significantly, while uncertainty about which path to take had increased.
Business process outsourcing must be reviewed before making any decision. The prerequisite is a comprehensive analysis of the key competencies actually required and those actually available in the company. Only with this knowledge is it possible to redefine or adapt processes. Perhaps, in one case or another, it makes sense to hire additional specialists for the core business and broaden internal know-how — even though this can become critical in an increasingly demand-based labor market. And perhaps it is just as useful to access external know-how for standard processes. It should then be ensured that the associated risks, such as reduced flexibility, remain manageable.
Business process outsourcing is now an important part of digital transformation. The reason: In addition to business processes, the necessary IT infrastructure is also transferred to third-party companies. Just a few years ago, accounting and payslips in particular were outsourced to third-party companies. Today, purchasing, HR, logistics, marketing and other areas of the company are also potential candidates for BPO. But what sounds tempting (“leaner structures,” “more efficiency,” “lower risks”) often has a downside. It is therefore all the more important to make such far-reaching strategic decisions only after a differentiated analysis and reflection.
