Depending on the nature and extent of its application, BPO can lower a company's costs from 10 to 70 percent. The elimination of inefficiencies caused by bureaucratic politics or institutional obstacles, along with access to state-of-the-art technology, economies of scale and labor arbitrage are among the reasons for the success of BPO in cutting expenses and capital outlays. Growing recognition that BPO delivers in this respect is driving implementations to double-digit growth.

Yet while executives rightly view BPO as a valuable cost-reduction solution, an increasing number also recognize it as a catalyst that can ultimately spur business transformation. In a sense, the demand emphasis for BPO is shifting from a purely financial to a more strategic approach. In so doing, it is prompting more and more C-level executives into step-by-step reexaminations of the structure, efficiency and effectiveness of their business models. The early movers are pressing ahead, pushing costs out the door and transforming their organizations into leaner, more competitive machines.