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BusinessProcessoutsourcingfm01_4307.qxd8/18/0411:46AMPageifm01_4307.qxd8/18/0411:46AMPageiiBusinessProcessoutsourcingTheCompetitiveAdvantageRICKL.CLICKTHOMASN.DUENINGJohnWiley&Sons,Inc.fm01_4307.qxd8/18/0411:46AMPageiiiThisbookisprintedonacid-freepaper.Copyright©2005byJohnWiley&Sons,Inc.,Hoboken,NewJersey.Allrightsreserved.PublishedsimultaneouslyinCanadaNopartofthispublicationmaybereproduced,storedinaretrievalsystem,ortransmittedinanyformorbyanymeans,electronic,mechanical,photocopying,recording,scanning,orotherwise,exceptaspermittedunderSection107or108ofthe1976UnitedStatesCopyrightAct,withouteitherthepriorwrittenpermissionofthePublisher,orauthorizationthroughpaymentoftheappropriateper-copyfeetotheCopyrightClearanceCenter,Inc.,222RosewoodDrive,Danvers,MA01923,978-750-8400,fax978-646-8600,orontheWebat:Whilethepublisherandauthorhaveusedtheirbesteffortsinpreparingthisbook,theymakenorepresentationsorwarrantieswithrespecttotheaccuracyorcompletenessofthecontentsofthisbookandspecificallydisclaimanyimpliedwarrantiesofmerchantabilityorfitnessforaparticularpurpose.Nowarrantymaybecreatedorextendedbysalesrepresentativesorwrittensalesmaterials.Theadviceandstrategiescontainedhereinmaynotbesuitableforyoursituation.Youshouldconsultwithaprofessionalwhereappropriate.Neitherthepublishernorauthorshallbeliableforanylossofprofitoranyothercommercialdamages,includingbutnotlimitedtospecial,incidental,consequential,orotherdamages.Forgeneralinformationonourotherproductsandservices,ortechnicalsupport,pleasecontactourCustomerCareDepartmentwithintheUnitedStatesat800-762-2974,outsidetheUnitedStatesat317-572-3993orfax317-572-4002.Wileyalsopublishesitsbooksinavarietyofelectronicformats.Somecontentthatappearsinprintmaynotbeavailableinelectronicbooks.FormoreinformationaboutWileyproducts,visitourWebsiteat:thecompetitiveadvantage/RickL.Click,ThomasN.Duening.p.cm.Includesbibliographicalreferencesandindex.ISBN0-471-65577-5(cloth)1.Contractingout.I.Duening,ThomasN.II.Title.HD2365.C482004658.4’058—dc222004008608PrintedintheUnitedStatesofAmerica10987654321fm01_4307.qxd8/18/0411:46AMPageivvForewordviiPrefaceixAcknowledgmentsxiiiPARTONEBPOOverview1CHAPTER1WhatIsSoRevolutionaryaboutBPO?3CHAPTER2WhoIsUsingBPOandHow?27PARTTWOToBPOorNottoBPO?45CHAPTER3IdentifyandSelecttheBPOOpportunity47CHAPTER4IdentifyandManagetheCostsofBPO70PARTTHREEBPOVendorSelection91CHAPTER5IdentifyandSelectaBPOVendor93CHAPTER6BPOContracts112contentsfm01_4307.qxd8/18/0411:46AMPagevPARTFOURExecutinganOutsourcingProject133CHAPTER7ManagingtheBPOTransition135CHAPTER8ManagingtheBuyer–VendorRelationship154CHAPTER9InfrastructureConsiderationsandChallenges172CHAPTER10BusinessRisksandMitigationStrategies189PARTFIVETheFutureofBPO207CHAPTER11FuturePotentialforBPO209Endnotes223Index233viContentsfm01_4307.qxd8/18/0411:46AMPageviviiThetopicofbusinessprocessoutsourcing(BPO)hasbecomecontroversialandthesubjectofagreatdealofmediaattentionoverthepastyear.Asanexecutivewhohasbeenusingoutsourcingasabusinessstrategyformorethanadecade,therecentupsurgeininterestinthetopicwasunexpected.Per-hapsthefactthat2004isanelectionyearhassomethingtodowithit.Ormaybe,astheauthorspointout,theconvergenceofanumberofsocialandtechnologicalfactorshasonlyrecentlymadeBPOanoptionfororganizationsofnearlyanysize.MyexperiencewithBPOrangesoveranumberofbusinessprocesses.OrganizationsthatImanageasChiefEngineerofOccidentalOil&Gashavetakenadvantageofspecializedlaborpoolsaroundtheworld.Asamultina-tionalenterpriseinahighlycompetitiveindustry,Occidentalmustbeaggres-siveaboutcontrollingcostsandemployingthehighestqualitylaboritcanfind.Occidental’sexperiencewithoutsourcinghasmostlybeenpositive,buttherehavebeenmanylessonslearned.FromtimetotimeIhaveconsideredtheprospectofwritingaboutthelessonsIhavelearnedininitiatingandmanagingaBPOproject.Timeandbusinessconsiderationshavealwaysintrudedintothosethoughtsandmadethemunrealistic.Fortunately,RickClickandTomDueninghavetakenthetimetowritethisbook,whichisafinepresentationofhowtoorganizeandmanageaBPOinitiative.ClickandDuening’sbookisacomprehensiveguidethatmanagersandexecutivesinnearlyanysizeorganizationwillfindvaluable.ThemixofinsightandpracticalitythatisevidentinthewritingwillprovidemostreaderswiththeconfidencetolaunchintotheBPOwaters.Thetoolsandtipscontainedinthisbookwillmakeeventhemostexperiencedoutsourcingmanagerthinkagainaboutthemethodsheorsheusesandwhethertheycanbeimproved.Ofcourse,nobookiswithoutitsdrawbacks.AttimesClickandDuen-ingtaketheirdiscussionstolevelsofdetailthataremoreappropriateforanacademicwork.Forexample,theirdiscussionsofchangemanagementandinterorganizationalrelationshipsarelongondetailbutalittleshortonex-amples.Still,thebookreadsverywellandmostmanagersandexecutivescanusefullyber

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