Everything Must Go: Business Process Outsourcing

That created its own complexity, as Penhale eventually found himself overseeing some 40 different outsource service providers and agreements. The solution? More outsourcing. Unisys tapped Exult Inc., an Irvine, California-based HR outsourcing company, to manage all of them. With many large companies as clients, Exult had experience in many facets of HR, including one that was very much on the minds of Unisys executives: how to move employees in and out of international assignments.

"Exult might move 10,000 employees in a given year, whereas we'd maybe move 300," says Penhale. "They can bring this volume to bear in their negotiations with third-party vendors, pitting our previous vendor, say, against their other contracted vendors, and, based on services, terms, conditions, and price, select the appropriate provider."

That gives Penhale more time to focus on the softer side of international relocation. "Instead of making sure service levels are defined and measured, and everything is running smoothly and paid for, which Exult does now, we're giving our attention to real human relations, which is what HR is about anyway," he says. "A contented workforce is a better workforce."

And a contented client, experts say, is one that assesses the burgeoning number of BPO providers as carefully as one might choose a roommate. "Basically, you're picking someone that you're going to live with for a period of time," says Casale.

"It's not about relinquishing control," adds Stephen Klei, CFO of ProBusiness, "but about becoming secure with the idea that someone else can continue your pursuit of excellence."

Finance chiefs seem increasingly comfortable with that idea; nearly two-thirds expect their firms to make greater use of outsourcing in the future. That's a figure that CFO can stand behind, because while we may make an occasional mistake, we're sure that the firm to which we outsource our survey tabulations would not.

Russ Banham is a contributing editor at CFO.

Reasons to Believe
Percent citing each reason as a "very important" rationale for their BPO efforts.

• Focus on core competencies:  67.3%
• Save money:  61.1%
• Tap vendor domain expertise:  55.5%
• Focus on strategic growth:  37.4%
• Maintain/reduce head count:  34.6%
• Redirect capital budget:  22.7%
• Reduce assets on books:  7.6%
• Other:  2.8%

Most widely adopted forms of BPO (% of respondents).

• Travel services:  46.3%
• Employee benefits:  43.9%
• Payroll:  43.9%
• Tax advice/processing:  37.6%
• Insurance administration:  37.1%
• Collections:  18.5%
• Recruitment:  18.0%
• Cash management:  16.6%
• Internal audit:  16.1%
• Human resources:  14.1%

Sources:  CFO magazine and AMR Research

BPO Is A-OK

A majority of companies already engage in some form of business process outsourcing:

• Currently doing BPO:  68.3%
• Plan to do BPO in 1-2 years:  2.0%
• No BPO plans:  29.7%

How do you foresee your firm's overall use of outsourcing?

• Increasing:  63.6%
• Staying the same:  28.6%
• Decreasing:  2.4%
• Don't know:  5.3%

Does your firm periodically assess the ROI of BPO arrangements?

• Yes:  45.1%
• No:  43.1%
• Don't know:  11.8%

Sources: CFO magazine and AMR Research

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