Limitations of BPO

BPO Disadvantages:



        Service expectation mismatch;
        Lower than anticipated cost savings;
        Data theft;
        Intellectual property protection;
        Higher training costs;
        Monitoring costs;
        Compromising confidentiality;
        Loss of control;
        Information security;
        Customer dissatisfaction; etc.

There are issues too, which work against these BPO advantages. Among problems, which arise in practice are: A failure to meet service levels, unclear contractual issues, (since when BPO started it has happened that employees don't had the chance on making regular to their job), changing requirements and unforeseen charges, and a dependence on the BPO which reduces flexibility. Consequently, these challenges need to be considered before a company decides to engage in business process outsourcing.

A further issue is that in many cases there is little that differentiates the BPO providers other than size. They often provide similar services, have similar geographic footprints, leverage similar technology stacks, and have similar Quality Improvement approaches.


 Risk is the major drawback with Business Process Outsourcing. Outsourcing of an Information System, for example, can cause security risks both from a communication and from a privacy perspective. For example, security of North American or European company data is more difficult to maintain when accessed or controlled in the Sub-Continent. From a knowledge perspective, a changing attitude in employees, underestimation of running costs and the major risk of losing independence, outsourcing leads to a different relationship between an organization and its contractor.

Risks and threats of outsourcing must therefore be managed, to achieve any benefits. In order to manage outsourcing in a structured way, maximizing positive outcome, minimizing risks and avoiding any threats, a Business continuity management (BCM) model is set up. BCM consists of a set of steps, to successfully identify, manage and control the business processes that are, or can be outsourced.

Another framework, more focused on the identification process of potential outsourceable Information Systems, identified as AHP, is explained.

L. Willcocks, M. Lacity and G. Fitzgerald identify several contracting problems companies face, ranging from unclear contract formatting, to a lack of understanding of technical IT- processes. BPO is a sector which is processed business from outsources.




Source: http://en.wikipedia.org/wiki/Business_process_outsourcing

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