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Business process outsourcing: Welcome to cloudshore

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What if your company could hire accounting, payroll processing or legal services with the same flexibility you get when you create virtual machines in IBM SmartCloud Enterprise (SCE)?

  • Through a self-service portal
  • Delivered on-demand and payment only for what you use
  • Delivered by a trusted provider
  • In a secure way
  • At a lower price, compared to doing it yourself

The idea of organizations having specialized companies taking care of their non-critical functions is called outsourcing, and it dates back to the 1970s. All this time, the whole concept has been evolving as new technologies provide new tools to develop novel business models.

Outsourcing has different characteristics depending on where the activities are actually being done:

  • Onshore: The provider is in the same country as the customer, so they basically share a whole business environment. Efficiencies in delivering the service arise from the provider being specialized in a specific activity.
  • Offshore: The provider is in different country from the customer, usually where skills to carry out the required activities are more abundant, and thus, cheaper. This means a cost advantage for the customer, but introduces cultural, regulatory and even time zone differences that can affect the result of the service.
  • Nearshore: The provider is in different country from the customer, but not very far away, so some business barriers are lower as they share some environmental characteristics such as time zone or language, while still keeping lower prices due to market differences.

Hey, this is a cloud blog post. What about the cloud?

  • Cloudshore:  If an activity has well-defined inputs, outputs and service level agreements (SLAs), it can be done in the cloud. This way, even individuals are competing with traditional outsourcing companies to provide the services.

Online talent markets like Elance, Freelancer, Guru or oDesk allow organizations to hire freelancers on-demand to perform specific tasks (virtually everything, from monotone telemarketing to specialized software development) as if they were cloud resources.

However, when outsourcing involves not only specific activities but also an end-to-end process, called business process outsourcing (BPO), the service standardization and capacity requirements make it difficult for individuals to compete (but it’s okay; there is still tons of work to be done).

Yet, taking advantage of cloud delivery models, BPO providers are able to offer business process as a service (BPaaS), which means the efficiency they gain by using cloud services (software as a service, platform as a service or infrastructure as a service) as bases for their operation allows them to design more flexible and cost effective services.  As a result, customers are able to buy commoditized versions of those available on-demand.

This is a clear example of how cloud computing is far more than a technical achievement, and is really transforming how we conceive our daily activities.

(Image courtesy of Stewart Hyman: http://bit.ly/HfNXZS)

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