Evaluating and Managing Business Process Outsourcing Ventures in the German Banking Industry

As previous research on outsourcing has predominately focused on why, what, and how to outsource IT operations, little is known about the specifics of Business Process Outsourcing (BPO). To understand the unique challenges of BPO, this cumulative dissertation analyzes BPO risks, benefits, and governance approaches from the outsourcer’s perspective. The research models developed are based on rigorous theoretical concepts and are validated using two surveys in the German banking industry. The results show that BPO risks significantly influence the attitude of bank managers towards BPO while strongly affecting the benefits associated with BPO. Appropriate governance instruments comprise formal (contract based) and informal (based on relational/social processes) governance elements whereas relational governance dominates contractual governance in explaining BPO satisfaction in both strategic and non-strategic BPO ventures. BPO satisfaction is even better explained if the interactions of relational and contractual governance as well as process related contingencies such as process standardization and output measurability are considered.