Tuesday, 19 June 2007

Balderdash and Piffle - Your help please?

18th June 07
Balderdash and Piffle - Your help please?
One of my favourite TV programmes right now is Balderdash and Piffle where the "engaging" Victoria Coren tries to track down the first known documented use of words and terms. Last week it was "dogging" and "pole-dancing" ...

I was today preparing for a brief pre-dinner talk I am giving on Thursday on BPO. It set me thinking - then researching - the origins of the term.When I looked at the Oxford English Dictionary entry for "outsourcing" it had first been used in the context of the automotive industry in Businessweek in 1981. But the first known use of it in a computer outsourcing context was in the Independent on 2nd March 1992.
Surely that was wrong?
Could I be heading for an entry of my own in the OED by proving that I used it at an earlier date?

But a search through my own writings (Yep, I have kept everything I have ever written since 1985) shows that I too first used the term in late 1992. I had referred to outsourcing as "Facilities Management" up until then. By the way, the first FM deal ever recorded was EDS and Frito Lay in Feb 1963. In the UK I was actually involved at Hoskyns when they signed the first UK FM deal with Willis Faber and Dumar in 1969.

The first use of the term Business Process Outsourcing is even more elusive. I don't think too many people would really argue with Capita's claim to have "kicked off the provision of long-term contracted services" in the mid 1980s. But they certainly didn't use the term BPO then. Indeed they described their activities as "Business Support Services" until well into the early 1990s. The first BPO-type contract in the private sector seems to have been Accenture (known then as Arthur Andersen) and their F&A deal with BP in 1991. But again, it was not called BPO at the time.

The first known use of the term BPO in a "Holway" document was in 1998. The SYSTEMHOUSE report starts with the words "You can decide to play in it. You can decide to ally with someone who's playing in it. you may even decide not to play at all. what you can't afford to do is stick your head in the sand and ignore BPO, particularly if you are in the IT outsourcing business in any shape of form".

I think I could even raise eyebrows if I made that statement to some stick-in-the-mud companies today. But, getting on for ten years ago, that was a "Wow!" type of claim. BPO revenues in 1997 were around £500m and Capita (the market leader by a country mile then ...and now) had revenues of £173m. Today Capita has revenues ten times higher at £1.73b and the UK BPO market is worth in excess of £5b.

If you did indeed ignore BPO then, you paid a heavy price. If you ignore it now...then maybe you just will not survive. Nelson Hall reported that in 2006 47% of all Outsourcing contracts awarded were BPO contracts. If you don't have a BPO offering (either directly or via a partner) you are at a serious disadvantage in the ability to win any type of IT outsourcing contract.

Now, I will admit that some of the forecasts for BPO growth have not been met. I have a chart predicting 30% pa growth between 2000-2010. That has not occurred. Indeed in 2005 BPO growth was <10% for the first time ever. However, I reckon that the UK BPO market will be worth around £20b (in today's money) in 20 years time (2026). It will grow at 2-3 times GDP whereas the rest of the UK S/ITS market will struggle to record any real growth at all.

Anyway, the point of writing the piece was not to give you yet another article along the lines "Ignore BPO at your peril". I've written too many of those in the last ten years.The purpose was to determine if anyone had any evidence of the earliest use of the term BPO. It must have been used before 1998 but I would be surprised (and so would the OED!) if you found a reference before 1992.

Please send to rholway@holway.com

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