Far Beyond Technology.

• Author: Marshall, Jeffrey
• Position: Outsourcing - Industry Overview

Yes, information technology remains the most popular outsourced function. But like the tools on a Swiss Army knife, specialists in other areas are proving useful, too.

Statistics for 2001 are hard to come by, but the business outsourcing market clearly isn't growing as quickly as it was a year ago. After all, the biggest noise in the economy in recent months has been the sound of companies slamming on the spending brakes as revenues have plunged.

Outsourcing isn't going away, however; the logic behind it is too compelling. So-called business process outsourcing (BPO), in particular, has surged in the past few years as companies conclude they are better off letting specialists handle the increasingly complex and mundane functions of running a business, allowing the companies to concentrate on their core competencies. The BPO field has drawn everything from startups to huge consulting firms like the Big Five.

"More companies are planning to outsource for strategic -- rather than tactical -- reasons than ever before" noted the Outsourcing Institute in its latest annual Outsourcing Index. With that the institute says, there's been a shift from outsourcing's past focus on technology to BPO, which is the fastest-growing segment of the industry. BPO's push into real estate management, for instance, was profiled in a September article, "What BPO Can Do." Still, technology remains the most popular outsourced function, representing more than 20 percent of all outsourcing expenses, the Institute says.

Research from the Outsourcing Institute suggests that 30 percent of companies now engaged in BPO are "actively searching for additional outsourcing opportunities in other functional and more business process-oriented areas." And there's plenty to choose from, judging from the growing list of functional areas being outsourced. What follows is a sampling of those, and some of the companies active in those segments.

Professional Employer Organizations

So-called PEOs have been around too long to be a fad. Aimed chiefly at small to mid-sized companies, they offer a broad range of administrative services around the human resources function: payroll processing, HR administration, health benefits administration, worker's compensation and monitoring of government regulatory issues.

What's particularly noteworthy about PEOs is the notion that they form "co-employer" relationships with the employees of client companies working at specific sites, as well as contractually assuming certain risks and responsibilities. Typically, the PEO also assumes...