Logica urges local companies to embrace outsourcing

Regardless of the cost benefits of business process outsourcing, less than 1% of local companies have opted for the BPO model.

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By  Greg Wilson Published  September 3, 2002

Middle East businesses have yet to embrace business process outsourcing (BPO), regardless of cost and efficiency benefits. According to estimates from local services company, Logica Middle East, less than 1% of Middle East organisations have opted for the BPO model.

“Businesses in the Middle East are seeking to reduce their internal spending, and non-industry-specific support activities represent an enormous potential market for service providers. Services that were in the past managed by various providers, are now being offered as whole solutions by one provider,” says Derek Kemp, Middle East CEO of Logica.

“So when procuring for a niche requirement, global businesses are increasingly adopting the design, build, finance, and operate (DBFO) model, long used by governments around the world. In this model, the provider designs the business processes, delivers a best practice IT solution to support them, and runs the resulting processes on an outsourced basis, typically using a financial or accounting model relating to business volumes,” adds Kemp.

Gartner Dataquest defines business process outsourcing (BPO) as “the delegation of an IT-enabled business process to a third-party that owns, administers, and manages the business process according to a defined set of metrics.”

Increasing number of businesses are reviewing their internal operations and then reorganising to concentrate on their core businesses. BPO enables companies to focus on their core capabilities more effectively.

“Outsourcing is a challenge, but it is more of a challenge to be competitive, flexible, and innovative while delivering all functions internally,” says Dr. Richard Sykes of Morgan Chambers, an outsourcing consultant. “The successful company embraces outsourcing with determination,” he adds.

BPO also can save businesses large capital investments, while also improving the service level within the organisation.

“The business benefits of BPO are enormous — especially for larger regional organisations, like those found in the government, energy and utilities, finance, and telecommunications sectors,” says Kemp.

“Ultimately, companies in the Middle East have got to ask themselves whether they can afford to sustain such extensive, and largely unnecessary, IT spending levels, when business process outsourcing has become a viable and immediate strategic alternative for them,” comments Kemp.

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