Opportunities Abound for Outsourcing Back-Office Service Providers, According to IDC

FRAMINGHAM, MA – MARCH 29, 2001 – Opportunities abound for providers of outsourcing back-office services. However, these opportunities won’t come to those who sit around. According to IDC, service providers that combine expertise in the business process and in the technologies that manage and enable the business process will gain most from the growth in this marketplace.


"New economic realities have led to greater bottom-line scrutiny," said Marc Pramuk, senior analyst with IDC’s Business Services group. "In an effort to improve profitability, businesses are reassessing the costs and contributions of their back-office operations, particularly in relation to HR and finance and accounting functions. What they are finding is that outsourcing gives them access to best practices and back-office expertise, which ease administrative burdens and improve flexibility and scalability while reducing costs."

According to IDC, the decision whether to outsource depends on where the company is in its life cycle. "Midsize companies may be the best candidates to outsource their back-office processes because they stand to gain the most from outsourcing – they are constantly reaching for the elusive economies of scale necessary to achieve a positive return on their investments," Pramuk said.

Customer knowledge and understanding of HR outsourcing will be particularly important to back-office outsourcing providers. According to IDC’s recent survey of vice presidents and directors of HR and CEOs in companies with 100-199 employees, between half and two-thirds of all midsize companies outsource at least part of their discrete HR processes.

IDC believes service providers that position themselves to leverage technology that provides both a reduction in costs and an increase in services to their customers stand to reap the greatest benefits from the recent outsourcing boom. "The more service providers offer an integrated suite of services that represent the entire value chain, the stronger their position to win new customers will be," Pramuk added.

IDC’s recently published bulletin, Exploring the Middle Market Opportunity for Outsourcing the Back Office (IDC #B24050), examines the opportunities for service providers that offer outsourcing of back-office processes. To purchase this bulletin, contact Jim Nagle at 1-800-343-4952, extension 4549, or jnagle@idc.com.

About IDC

IDC delivers dependable, high-impact insights and advice on the future of ebusiness, the Internet, and technology to help organizations make sound business decisions. IDC forecasts worldwide markets and trends and analyzes business strategies, technologies, and vendors, using a combination of rigorous primary research and in-depth competitive analysis. IDC provides global research with local content through more than 700 analysts in 43 countries worldwide. IDC's customers comprise the world's leading IT suppliers, IT organizations, ebusiness companies, and the financial community. Additional information can be found at http://www.idc.com.

IDC is a division of IDG, the world's leading IT media, research and exposition company.


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