Companies are thinking BPO, finds survey

The thought of handing over “non-core” enterprise activities such as accounting, human resources and IT management via business process outsourcing (BPO) is becoming more appealing to Canadian companies, according to a “pulse-taking” joint survey by CNC Global Ltd. and The CIO Summit.

Nearly half of those polled revealed that their organization plans on using BPO to “deal with increasingly complex business needs in 2003,” according to CNC Global. The findings are based on more than 135 Canadian CIOs and other “C-level” execs who completed the survey during the annual CIO Summit in Toronto last November.

BPO refers to the contracting out of non-core business processes to an outside firm, potentially enabling organizations to reduce costs and focus more on core competencies. For the enterprise, it essentially means handing over entire business processes, including the IT element, over to BPO speciality firms to manage.

CNC Global CEO Lyle Kerr noted that while the survey is not a statistically valid sample, the findings could be extrapolated as an emerging trend within the Canadian landscape. “This is more a snapshot,” the Toronto-based Kerr said, adding that tax processing, Web and application services, recruitment, payroll and employee benefits administration are among some of the most widely adopted versions of BPO. It’s about core competencies, Kerr continued – rather than getting bogged down with operational concerns, BPO is a more strategic IT solution.

According to figures from research firm Dataquest Inc., a division of Stamford, Conn.-based Gartner Inc. the worldwide BPO market is expected to exceed US$300 billion by 2004. Compared to the U.S., Canada remains relatively conservative when it comes to BPO.

There still remains that fear, Kerr said, that handing over business processes to an outside party translates to a loss of autonomy and renders organizations inflexible in terms of managing human capital. The survey reflects this – approximately 48 per cent of CIOs noted that they had minimal involvement in developing human capital strategies while 44 per cent stated there currently wasn’t a procedure in place for showcasing their company to potential employees. BPO firms in areas such as human resource recruitment, for example, can draw on technical knowledge and databases that client enterprises may lack to recruit potential employees, Kerr said.

Indeed, the study also discovered that 25 per cent of respondents lacked faith in their companies’ human capital management strategy. Sixty-five per cent of execs noted that they experience “moderate to significant” problems attracting and retaining qualified IT professionals. This suggests, Kerr said, that while CIOs tend to place a high emphasis on getting the “best and the brightest,” execs are so engrossed in the day-to-day operations that developing an effective human capital strategy tends to fall by the wayside.