Global BPO market to reach revenues of USD93.4bn

The global business process outsourcing (BPO) market will reach revenues of USD93.4 billion in 2015, a compound annual growth rate (CAGR) of 5.4% from the USD71.92 billion it hit in 2010, predicts Ovum.

The independent technology analyst finds that strong growth in emerging economies such as India and China is driving the global market forward as businesses in these regions wake up to the benefits of BPO.

According to Ovum’s forecast, the BPO market in Greater China will increase at a CAGR of 16.1% from the end of 2010 to the end of 2015. Meanwhile, India’s market will increase by 15.7% for the same period.

Ovum analyst Hansa Iyengar commented: “In the post-recession business environment, it has become imperative for enterprises to keep costs under tight control to maintain competitiveness. BPO eliminates the need to invest in people and systems to manage non-core processes, potentially reducing costs and increasing efficiency. By outsourcing these processes, enterprises can focus their resources on growing their core business.

“Moreover, BPO is also gaining ground in areas such as HR, engineering design, and research and development outsourcing. Enterprises are realising that outsourcing these areas can be an effective way to reduce costs, increase efficiency, and speed up go-to-market for new products, much in the same way that outsourcing back-office processes can.”

According to Iyengar, it will be developed economies that will exploit these new BPO areas the most, with emerging markets newer to the arena choosing to test the water with first-generation outsourcing such as customer care, payroll processing, and helpdesks.

The markets in North America and the UK and Ireland will also see growth, albeit at slower CAGRs of 2.7% and 4.1%, respectively. Iyengar commented: “The marginal growth in North America during Ovum’s forecast period is due to the maturity of the region’s market, with enterprises there having embraced BPO decades ago. North America’s slow recovery from the global recession and subsequent cautious spending by enterprises are also having an impact.”

According to Iyengar, to take advantage of the predicted growth in outsourcing vendors will need to be aware that pricing of contracts is the major issue at the negotiating table. She added: “Enterprises are moving away from multi-billion-dollar, single-vendor deals and spreading out their investments and risks.

“Meanwhile, the small and medium-sized enterprise segment is rapidly opening up to outsourcing. Vendors need to be prepared with a game plan to meet the demands of this market. Mainly these are for low-priced, highly flexible and scalable solutions, which are accompanied by the option to customise offerings and personalised customer service.”

Share this News
Share |
Subscribe to our Daily Newsletter here