So-called BPO, or business process outsourcing--which involves an outside company taking over various back-office functions including procurement, invoice processing and the like--has become a vital market for IT companies as corporate spending on conventional data-center services has dropped.
Computer services giant Electronic Data Systems (EDS), for example, calls "enterprise shared services"---when a company outsources several back-office operations at once--its top growth opportunity.
About 14 percent of EDS' annual revenue, or US$3 billion, comes from BPO, said spokesman John Clendening. And the company is shooting for more BPO income.
In November, EDS said it planned a multimillion-dollar investment over the next five years to meet customer demand for help-desk operations and BPO services, including customer relationship management (CRM), human resources, finance and accounting and procurement.
The total investment will come to about US$100 million and include upgrading the technology at customer contact centres, said Paula Kruger, EDS' president of CRM services. Those contact centres would be used to handle questions from employees at companies that are outsourcing their HR tasks to EDS, she said.
Although EDS has processed transactions such as insurance claims for decades, Kruger said the comprehensive offer to outsource internal business functions has emerged more recently. "We've been pretty excited by it," she said.
The trend for computer services companies to move into back offices is accelerating in part because traditional business functions are now enmeshed in the computing backbone, said Rebecca Scholl, an analyst with research firm Gartner.
Shifting from providing IT assistance--running computer help desks, fixing and installing PCs, and managing networks--to handling payroll checks and related tasks is less of a jump than it used to be.
But Scholl warns that the transition into the growing BPO market may be bumpy for companies historically focused on IT services.
Possible hurdles range from an overly technological approach and a short-term "project-based" mentality to a range of unfamiliar competitors, including BPO providers based in India and business services companies such as payroll specialist Paychex.
"The competition comes from so many different angles," Scholl said.
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