Business Process Outsourcing Is A New Management Strategy

Business process outsourcing is a new management strategy, which encompasses transfers of an organisation’s internal functions to a third party. In essence, it encompasses entrusting and ensuring a third party with company functions. The third party executes the function and meets the expectations of the company (Kozweska 2004). Company objectives primarily dictate the above expectations. A company transfers business tasks and processes to an external provider, a specialist in a particular field, to enhance its profitability and hence return of investment to its shareholders. Business process outsourcing also provides a basis for establishment long-term, mutually beneficial relationship between the company and the outsourced provider.†¦show more content†¦The company has outsourced its Information Technology (IT) functions to an Indian IT company, Indo-System Solutions (ISS). Initially, Globshop’s senior management was skeptical about transferring the above fu nction to the IT services provider. However, over time, they came to realize benefits accrued from outsourcing. However, there are still risks associated with the above management strategy. Globshop’s senior management requires an in-depth analysis of the above strategy, which defines the company’s future relationship with ISS. Growth of Offshore Outsourcing Several factors have fuelled the unprecedented growth in business process outsourcing. One such factor is the technological revolution. Technological revolution especially in the information technology sector has seen the introduction of fast and reliable communication channels. Such channels include high-speed internet, which ensures that individuals from different countries can communicate in real time (Duening Click 2005). This facilitates a multi-location execution of tasks where employees in different locations communicate using tools such as video conferencing. This has increased contact between companies and their outsourced services providers. As such, efficient communication between companies ensures smooth and timely execution of tasks and functions. This translates into an overall efficiency at the company. Another factor is the emergence of newly developed economies including