Emergence Of New Business Process Outsourcing Destinations
Oversaturation of the business process outsourcing (BPO) services industry in India, the Philippines and Malaysia has pushed companies to search for other cost-effective locations in Central and Eastern Europe, Africa, and Latin America. Countries in these geographies are mainly emerging economies offering benefits such as tax incentives and provision of good telecom infrastructure, while providing a low-cost employee force. For example, the attractiveness of BPO service providers in Romania includes the fastest Internet connection among European Union (EU) countries, a high number of skilled workers with a background in science and technology, and a low salary rate, with it being one of the lowest salary rates in the EU. Another example is Egypt, where the government offers tax incentives to outsourcing businesses, invests in the continuous development of technology parks such as Silicon Waha, and provides workers well-versed in European languages such as French, German and English.
The global business processes outsourcing market was estimated at $216.8 billion in 2019, and is expected to grow to $278.6 billion in 2022 at an annual growth rate of around 8.7%. Western Europe was the largest region in the business processes outsourcing market in 2018, accounting for $76 billion or 38% of the total share. The market size is mainly supported by the number of Western European companies outsourcing services to low-cost countries in Eastern Europe and Asia to capitalize on the availability of a professional workforce and save costs, that is outsourcing of financial services and customer care services to the Philippines, and outsourcing of IT services to India and Eastern European countries such as Bulgaria and Romania.
Due to increased outsourcing activities in Asia Pacific, it was the fastest growing region of the BPO services market historically, at an annual rate of 10.4% during 2014 – 2018. Asia Pacific will continue to grow at a rapid pace of 13.2% year on year to 2022. Asia Pacific’s BPO market is supported by the number of domestic companies outsourcing their functions to third-party companies in the same geography, and to multinational BPO providers to capitalize on their expertise in a short period of time.
The USA was the largest country in the business processes outsourcing market in 2018, accounting for around 30% of the total share. The market size is mainly supported by the number of American companies outsourcing their processes abroad to such countries as India and the Philippines to capitalize on the availability of English-speaking population, and to Latin American countries to serve the Spanish-speaking population in the USA.