IT-supported business process outsourcing (BPO): the good, the bad and the ugly

Outsourcing decisions are not, technically, irreversible. But in practical terms the organizational disruption and financial costs of bringing services back in house (“backsourcing”) mean that few organizations revert, even when quite dissatisfied with an arrangement. Instead, organizations typically seek to move to another outsourcing arrangement, that is sometimes less attractive than the original in-house delivery. Preliminary evidence from studies of business process outsourcing (BPO) experiences, like those into IT outsourcing’s success, suggests that only a minority of organizations report their BPO arrangements as satisfactory, implying that many are caught in this “can’t go back” bind. In this paper the authors examine two organizations contemplating the adoption of BPO, and consider their expectations and experiences in light of existing empirical literature. The paper concludes with a set of principles to assist organizations to avoid BPO failure.