Abstract: This study reports an exploratory study that examines the adoption of Business Process Outsourcing (BPO) by companies in Malaysia and the impact of BPO usage on the financial performance of those companies. Empirical data were collected through a survey of 104 Small and Medium sized companies (SMEs) in the service industry. The survey reveals that the Malaysian SMEs are beginning to outsource their business processes, in particular call centres. More companies are outsourcing their business process in comparison to those who do not. The study indicates contradictory findings on the impact of BPO usage on the financial performance of the participating firm.