Cost Management

               I learned that cost is one  of the three primary elements of the decision to outsource along with productivity and mission identify. Project cost management is traditionally a weak area of IT projects. IT project managers must acknowledge the importance of cost management and take responsibility for understanding basic cost concepts, cost estimating, budgeting, and cost control. The various costs associated with outsourcing are not always easy to forecast or identify. I also learned the two types of cost which are the Financial cost and Strategic cost. Financial cost is about Assessment of the outsourcing initiative, launching  the initiative, maintaining the initiative. While Strategic cost are associated with BPO talk about the potential loss of organizational learning that results when an in-house process is moved to an external service provider. The major strategic component of a BPO relationship is the relationship between the buyer and vendor. The costs that are involved in establishing and maintaining such a relationship are relationship cost.

                There is also this "Total Cost Management" which means the process of identification, forecasting and development of mitigating tactics for the costs associated with any project.

I learned that the BPO life cycle consists of the following phases:

- Analysis of the opportunity
- Vendor Selection
- Contract development
- Transition
- Operation

Note that the life cycle doesn't only limit to five, but could be more depending on the situation.

Selecting a vendor:
After the BPO opportunity has been identified, the organization needs to decide whether to hire a third party to assist with the vendor selection. And the developmental of contracts whereas the primary cost of this phase are to do with the negotiating a contract with the vendor. It is not advisable to cut costs in this area where there is too much at stake because services, deliverable and remedies have to be specified.

It was also mentioned that the following are the common people involved in a Business Process Outsourcing company:

- BPO Analysis Team (BAT)
- BPO Consultants
- Market Research Specialist
- Change Management Consultant
- Project Manager
- Vendor (Third Party)
- Buyer (The Company)