Business Process Outsourcing (BPO) is not a particularly new idea. Even the most recent incarnation dates back to the late nineteen eighties. However, in the intervening years two things have combined to make the broad concept of process and function outsourcing the most pervasive arrow in the quiver of large and small businesses alike. The first enabler was the advent of the truly global economy; another old idea given new reality in the post “cold war” political environment. The second was the universal enabler- the explosive technological advances that accompanied the internet revolution.
The modern outsourcing phenomenon sought to take advantage of newly permitted access to low cost labor and services and adequate, if not optimal lines of communication. It wrapped itself in noble strategic goals but at heart it was a cost reduction exercise – and the cost reductions were often expected to be on such a scale that they could not be ignored. The early outsourcing ventures were generally a game for large companies with deep pockets – fortunate, as many failed spectacularly. However, there is no doubt that this cost driven experiment with globalization changed both the global economy and the way large and small businesses play the game in a fundamental way. Outsourced fueled globalization became a most potent enabler in its own right.
Many of the early outsourcing ventures were crudely conceived, both from a commercial and a technical perspective – but help was on the way at the speed of light in the form of the Internet and its surrounding technology partners. Lines of communication shrank, processing power and data expanded on demand and a shaky experiment hatched in the hearts of corporate finance departments blossomed into a sophisticated and multi-faceted business practice that is almost inseparable from general business strategy at every level of business.
There are many good definitions of Managed Services – however, a simplistic and reasonable description would be to say that Managed Services are mid-market BPO. Small and medium businesses never truly “outsource” anything. It is an ironic fact that the practice of outsourcing both a process and its accountability – an attractive prospect for smaller companies – generally requires business and commercial resources only available to relatively large companies. Managed Services are a cheaper, more streamlined, less customized version of outsourcing but they retain many of the same benefits.
For a small business, managed services offer strategic options that can enhance operations at every level. There are the obvious benefits that begat the revolution of converting fixed cost to variable cost or retiring cost all together. However, for a small but growing company forced to confront larger competitors there is the opportunity to add progressive expertise and functionality at a stage and cost previously thought impossible – moreover, the sheer scale of available services, the price levels and the geographical diversity of services means that there is a clear buyers’ market and small businesses planning to become bigger ones cannot afford to ignore the opportunity.
The only important question for a small business contemplating managed services is how does this make my business better? How does it increase overall efficiency, allow us to focus more sharply on our core competencies and help us to cast the proverbial “giant shadow”. Managed Services are what the military refer to as “force multipliers” – they allow small armies to compete with large armies – and win!
Listen to discussion about Managed Service,s their strengths, pitfalls and how they are force multipliers with: