To survive, firms are turning toward business process outsourcing (BPO), which is defined as the delegation of one or more business processes to an external provider to improve overall business performance in a particular area. For example, gas and electric companies are outsourcing their cost centers – human resources and purchasing functions – so they can concentrate on their core competence, making and selling energy.
The market trends that drive the adoption of BPO include pressure to increase earning and reduce costs and an increased need to create and maintain a competitive edge. Traditionally, outsourcing has been used as a cost-control technique to move cost-centers such as data processing, payroll processing and systems development to outside specialists.
What does this trend mean for e-business?
Outsourcing lays the foundation for creating the virtual enterprise, the core of the e-business concept. It is clear that a single organization working alone is no longer a justifiable business model.