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BPO vs Shared Services: Is It Really One Or The Other?

Business Process Outsourcing or Shared Services? People have been arguing about the relative merits of both for years. And, in today’s world of radically shifting business conditions, the debate is perhaps more pertinent than ever.

But, given current and future economic, industrial and technological trends, is any one approach better than the other? Or can we at least determine certain situations when one approach definitively trumps the other?

BPO involves contracting an outside vendor, with the appropriate skills and resources, to carry out the work you need done on your behalf.

Shared Services, on the other hand, refers to the creation of a single, autonomous business unit to provide services simultaneously required by separate parts of an organisation but which were previously supplied “on-site”, independently.

In general, BPO is credited as generating greater productivity since superior systems, processes, and technologies in many cases allow the outside vendor to complete the work more efficiently and to a higher standard.

However, if you have the skills, resources and time to carry out the work required in-house, the cost of the transition to the outsourced model may not be offset by the savings you make and the increase in the quality of work you receive and don’t need to pay supplier’s margin.

And, whilst it’s true that outsourcing tends to be implemented more quickly, if the vendor’s skills, vision and actions don’t match your organisation’s objectives, the results may be unsatisfactory and even ineffectual.     

Indeed, although keeping your operations in-house – where you have more control over outcomes and therefore more chance of successfully pairing output with your unique requirements – can be time-consuming and demanding, having confidence in the process and ultimately receiving high-quality work may be preferable.

With all this in mind, perhaps it would be fair to say that, in general, if you have critical mass and require a bespoke solution that can be rolled-out slowly, then you should consider Shared Services. On the other hand, if you require a solution quickly and believe that your requirements aren’t completely unique, then BPO may be for you.

Of course, many organisations will require different solutions to different problems, and may in fact end up using a combination of both – a hybrid.   

Do you agree with our analysis? Let us know.      

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