A decision model for business process outsourcing

Abstract

Recently, information technology outsourcing has been one of the critical issues in organization management. In particular business process outsourcing(BPO) as an advanced type of IT outsourcing will be "the next big wave" in information technology services. BPO can be defined simply as the delegation of one or more IT-intensive business process to an external provider. According to a study published by IDC, worldwide spending on BPO services totaled $712 billion in 2001. IDC projects the worldwide spending on BPO market to grow to 1.2 trillion by 2006. Despite the recent focus on business process outsourcing in the popular press and the continuing expansion of market, prior studies have examined issues related to traditional IS outsourcing. And there are no researches suggesting important factors that should be considered for the decision have been outsourcing as well as a decision model. Historically such decisions have been often made primarily on the ground of cost. In recent years, however, there has been an increasing recognition of the need to take into account a wide range of factors including firm``s other internal factors and environment other than cast. This paper identifies factors affecting BPO decision and structures the decision model using the analytic hierarchy process (AHP) method. By proposing a quantitative decision model, this paper will help the management make better decisions in outsourcing their business process and obtain the most benefits from BPO.