Information Technology Services & Sourcing


Firms are increasingly using onshore and offshore business process outsourcing (BPO) to manage their primary and supportfunctions and achieve their strategic objectives. Despite the growing significance of BPO, there is limited understanding ofthe performance outcomes for firms that engage in BPO. To study the performance implications of BPO, we first develop aconceptual model based on literature from operations management, performance measurement and vendor management. Wethen validate our conceptual model by performing an empirical study of data from 47 publicly traded firms in the U.S. Wefind that a firm’s performance measurement focus and strategy dictates whether the firm achieves quality, cost and/or timebenefits from BPO, and that quality benefits from BPO lead to cost and time benefits. Our findings suggest that BPO clientsand vendors should focus on quality first, and that quality benefits will lead to subsequent cost and time benefits.