BPO refers to companies farming out tasks...

BPO refers to companies farming out tasks that can range from employee benefits management to insurance claims processing to call center work to complex research projects. Companies have been "doing BPO" for many years when you consider activities such as hiring outside legal counsel or having paychecks cut by a provider such as Automatic Data Processing. But in the past several years, amid continued evolution of the Internet and growing corporate experience with technology outsourcing deals, expanded outsourcing options have emerged. These include shipping back-office work to lower-wage nations such as India, Singapore, the Philippines, and so on.

In principle, BPO arrangements allow companies to cut costs and focus on their core activities. But the deals can be less than ideal. A report last year from Forrester Research found that 20% of a group of North American executives currently using or investigating BPO said their lack of proper performance metrics was a major challenge in working with BPO firms. Some 9% cited overstated supplier expertise as a major challenge, and 19% indicated that savings from BPO was less than expected or had not materialized at all.