Business process outsourcing: A case study of Satyam Computers

The prominence of business process outsourcing (BPO) continues to intensify in todayʹs hyper-competitive marketplace. Engaging in BPO can help an organization focus on its core competencies, while gaining specialized knowledge, skills, and processes in auxiliary spaces. The literature is laden with evidence that engaging in a BPO will help organizations secure financial, operational, and even strategic advantages. While there is little doubt that organizations can attain these benefits, few BPO arrangements work out as planned. Managing risks in BPO arrangements is paramount. In this case analysis, we describe a significant failure through chronological description of scandals that took place at one of Indiaʹs largest outsourcing vendors, Satyam Computer Services. In describing the study, we draw attention to the fact that organizations need to (1) improve their sensing capabilities and keep abreast of strategic transformations at their outsourcing vendors, (2) be able to plan for and execute contingency plans, and (3) balance the risks and rewards of BPOs in terms of knowledge and capabilities dependencies.