John K. Halvey.

John K. Halvey

Partner, Milbank, Tweed, Hadley & McCloy LLP 

BPO is the revenge of the Internet and is driving us to what can only be called an outsourced economy. Business Process Outsourcing will eventually level the playing field and create a commonality with outsourced services. On a going-forward basis, competitive corporate differentiation will depend as much on exactly what a company chooses to outsource and how it extracts value from its outsourced relationships as what the company actually produces. While initially thought of as simply a cost-saving strategy and typically an offshore solution, BPO is rapidly becoming a multi-shore (which includes the U.S.) corporate weapon that simply delivers the best talent capability for the need. What is going to separate a top CEO and CFO will be their ability to best utilize BPO as a strategic tool to best market what their company stands for. Dell and Cisco are prime examples of early adopters with successful BPO implementation strategies. Corporate value will lie in who, what and how a company's portfolio of BPO suppliers is created. Will you use one vendor or separate the outsourced process to two suppliers for reduced risk? Will you reacquire the process in the future? Will you invest in the BPO provider? With what type and to what extent will you seek to expand through BPO outsourcing? In addition, with a BPO strategy comes governance issues, and aggressive steps will be taken to ensure that privacy laws are met, data security issues are maintained and, most of all, ownership of a corporation's "process strategy" is retained. There will be an insurgence of BPO "process patents," and corporate value will increase based on these new assets. Your ability to compete in the future may be in asking if you currently have any BPO process patents pending.

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