Evaluating Business Process Outsourcing using Coordination Theory

Increasingly organizations are outsourcing their business processes to offshore locations. The goals cited include cost savings, achieving strategic focus, alleviating skills shortages and seeking to implement best practices. Current reports from actual outsourcing case studies indicate that many organizational goals remain unfulfilled. This paper proposes to study the impacts of BPO on the client organization using Coordination Theory. A case study of an organization, which outsourced its service delivery process and subsequently insourced parts of it, is presented. The case study supports the existence of strategic and operational gaps between the client and vendor organizations, which negatively impact the BPO. A follow up empirical study is being pursued to quantitatively measure the success of BPO using three costs vulnerability, coordination and production for different categories of processes. The results of this study will have implications for the selection of business processes or functions that can fare better when outsourced.