SaaS Prevalent in HRO but Slow to Gain Adoption in Other BPO Segments

Multiple software-as-a-service definitions, offerings and 'look-alikes' clouding landscape, says Everest in new report

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Dallas — September 28, 2010 — Although adoption of software-as-a-service (SaaS) and business process outsourcing (BPO) is growing rapidly, the combined SaaS-BPO approach has yet to see significant traction in BPO beyond human resources outsourcing (HRO), according to a new report from consulting and research firm Everest.

A new Everest study, "Role of Software-as-a-Service (SaaS) in BPO," aims to demystify the BPO-SaaS approach marked by multiple definitions, offerings and "look-alikes."

The study suggests a framework to differentiate SaaS and non-SaaS solutions in BPO and highlights the various engagement models, value proposition and challenges of a combined SaaS-BPO approach. It also highlights adoption trends in the key BPO segments of HRO, finance and accounting outsourcing (FAO) and procurement outsourcing (PO).

The report finds most instances of adoption of the SaaS-BPO approach, outside of HRO, involve a buyer having an existing BPO or SaaS relationship and the buyer then driving an independent BPO and SaaS play.

"Although some SaaS and BPO players have initiated partnerships, they are in a very nascent phase," said Rajesh Ranjan, a research director with Everest. "As some of these partnerships solidify and successful case examples emerge, this approach will see increased adoption in other segments as well. Further innovations in technology, including the move to 'Cloud' platforms, should help further reduce total cost of ownership thus making the value proposition impossible to ignore."

Adoption of the combined SaaS-BPO model is highest in HRO and is the predominant model within sub-segments such as payroll, benefits administration and, increasingly, learning services outsourcing (LSO).

The procurement outsourcing market is seeing emergence of sourcing-focused SaaS-BPO solutions, with FAO seeing minimal activities. With the exception of HRO, adoption is largely restricted to the mid-market.

The Everest report is available for sale here.

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