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IT Productivity Payoff

December 30th, 2002 · 2 Comments

Writes David Kirkpatrick (Fortune):

What change in habits or business practices could unleash the power of computing to dramatically boost productivity?

I have a candidate–business process outsourcing. While its not something we immediately associate with computing and networks, its only after companies are automated and connected by a commonly accessible network (the Internet) that they can easily create links between themselves and their suppliers. Work can be passed seamlessly from worker to worker regardless of location.

Now the question is starting to arise: Where is work most efficiently done? Though the process is slow, because the implications for both societal and corporate organization are unsettling, more and more companies are beginning to understand that many jobs dont have to be done at the office. Weve seen a resulting increase in home-based work, and dispersal of back-office functions further from high-rent districts.

But the cost-savings grow really huge when companies exploit the big discrepancies in labor rates between the U.S. and still-developing countries like India, and outsource entire business processes to operators far away. International business process outsourcing, or BPO, started a few years ago with call centers, and its spreading to a wider variety of jobs. It may enable a quantum leap downward in labor costs. Ravi Aron, a professor at the Wharton School of the University of Pennsylvania, estimates that such outsourcing can save companies up to 60% on labor.

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