An exploration of client-supplier relationship dynamics within Business Process Outsourcing

Abstract

Business Process Outsourcing (BPO) is the term used to describe the commissioning by client firms of specialist providers to fulfil certain services on their behalf. These services are generally integral to the client firms' operations, and would traditionally have been carried out within a firm's internal organisational structure. By definition, the services included in BPO are part of a firms' operational business processes. BPO services are therefore distinguished from the outsourcing of functions that are more infrastructural in nature, such as Information Technology Outsourcing (ITO), or Third-Party Logistics Outsourcing (3PL). In practice, four types of services are typically included in this sector: call centre services, financial reporting and accounting services, human resources support services, or procurement services. Academic studies of BPO have consistently confirmed that, in common with more mature forms of outsourcing, an effective relationship between the client and supplier of services is critical to the overall success of a BPO arrangement. This resonates strongly with my personal experience as a practitioner where, prior to undertaking my full-time PhD studies, I worked for over 30 years in the technology industry. In the final 10 years of this career I was responsible for managing portfolios of large BPO and ITO contracts between my employer (IBM) and a range of customers in Ireland, the UK, and across Europe. Over this time I grew increasingly aware of the importance of the inter-organisational relational dimensions of any outsourcing agreement. I also noted that as business needs change and key actors come and go, client-supplier outsourcing relationships can go through periods when they are very effective, and also periods when they can be highly fractious and dysfunctional. This experience was a prime motivator for this research project as it highlighted the need for a deeper understanding of the drivers of collaboration and friction. In particular it raises a question about whether there is a predictable path of evolution in an outsourcing relationship, and if so what are its phases and points of transition from any phase to the next. ...