Conclusion 03

Conclusion 03: Applications & Processes

Despite the hype, application and business process outsourcing has remained steady for the past few years, and is projected to remain so. Most application areas have seen 2 percent to 5 percent increases in outsourcing, hardly the groundswell expected in tough times. Business process outsourcing is still a fledgling trend: Processes with real bottom-line impact like customer service, logistics and purchasing are rarely being outsourced.

The largest jump in the use of application outsourcing from 2000 to 2001 was in human resources information systems (HRIS). Projected to rise from 14% in 2000 to 20% in 2001, outsourced HRIS usage actually grew to 30% from March 2001 to Feb. 2002, the 12-month period covered.

Tomer relationship management, which has received much outsourcing hype, was projected to be used by 30% of companies, but was actually employed by only 20%.

Projected differences between 2001 and 2002 are small, with the largest change found in business process/business re-engineering, used 30% last year but projected at only 21% in 2002.

Business ocess outsourcing isn't the growth area many are claiming; companies are planning to outsource processes at or slightly above the same low rates as last year. Customer service support was only outsourced by 12% of respondents in 2001, and other areas were even lower: 9% for logistics management, 8% for transaction processing and 6% for purchasing.

Probably due their complexity, larger companies were more inclined than their smaller counterparts to be-lieve they'd need to outsource business process and business re-engineering applications, 24% to 13%, respectively, and content management, 21% to 9%, respectively. Smaller companies more typically outsource payroll, 55% to 37%.

This article was originally published on 05-15-2002
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