The antecedents of process integration in business process outsourcing and its effect on firm performance

Abstract As service processes become candidates for outsourcing, interest in the global business process outsourcing (BPO) industry has grown considerably. In this study, drawing on information processing theory, we examine the role of integration in BPO and its effect on BPO firm performance. BPO Integration is concerned with the overall coordination of business processes and activities across different units within the outsourced environment. It involves both internal process integration – effective integration of task execution within the BPO and external process integration – effective integration between the BPO and their clients. Using survey data gathered from 205 Indian BPO service providers, we analyze the antecedents of process integration and its impact on BPO performance. The antecedents we examine are task complexity, task security, end customer orientation of the client and IT capability of the BPO. Among other results, we find that both internal and external process integration partially mediate the impact of the antecedents on performance. We draw managerial implications of our research to practicing BPO and client managers on how BPO outsourcing can be made successful.