Role of Software as a Service (SaaS) in BPO

21 Sep 2010
by Rajesh Ranjan



With labor arbitrage and incremental process improvements becoming table stakes in BPO, both buyers and suppliers are looking at new avenues to unlock value from their outsourcing relationship. Technology has emerged as a key lever to enhance the value proposition of BPO. As the role of technology becomes more pervasive, Software as a Service (SaaS) has emerged as the buzz word and offerings claiming to be SaaS have gathered momentum. However, there are multiple definitions and flavors of SaaS that has clouded the landscape.

SaaS can reduce technology-related Total Cost of Ownership (TCO) and time-to-value. On the other hand, BPO has delivered substantial operational cost reduction, operating efficiency/effectiveness, and other tangible and intangible benefits and is now a proven model. A combination of both SaaS and BPO is an emerging trend in the marketplace, that can deliver significant value to all the stakeholders involved (buyers, SaaS technology providers, and BPO suppliers) but also poses some challenges.


This research paper demystifies the combined SaaS-BPO approach and highlights the adoption trends across the key BPO segments - Finance and Accounting Outsourcing (FAO), Human Resources Outsourcing (HRO), and Procurement Outsourcing (PO). This paper discusses:

  • The role of SaaS, clearly defining and differentiating various flavors of SaaS and other technology models
  • The various engagement models in which the stakeholders (SaaS technology providers, BPO suppliers, and buyers) interact with one another
  • The value proposition and challenges from a combined SaaS-BPO approach
  • The adoption trend across BPO segments and the future outlook for the SaaS-BPO approach

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