Business Processes Outsourcing Market Definition
The business processes outsourcing (BPO) market consists of sales of BPO services by entities (organizations, sole traders and partnerships) that provide BPO services. These services include (CRM) customer relationship management, HRO (human resource outsourcing), KPO (knowledge process outsourcing), data entry outsourcing, healthcare BPO, financial services outsourcing, engineering services outsourcing and other BPO services. BPO services providers may use their own software or buy from external vendors to provide service to their customers. This market excludes sales of BPO software products required to offer BPO services.
Business processes outsourcing is the process of subcontracting business-related operations to third-party vendors or services providers.
Business Processes Outsourcing Market Size
The global market for business processes outsourcing reached a value of nearly $199.4 billion in 2018, having grown at a compound annual growth rate (CAGR) of 6.1% since 2014, and is expected to grow at a CAGR of 8.7% to nearly $278.6 billion by 2022.
Growth in the historic period resulted from the rise in corporate profit, availability of a low-cost talent pool in emerging economies and technological transformations in the retail and e-commerce verticals. Factors that negatively affected growth in the historic period were stringent government regulations and cybersecurity concerns.
Going forward, adoption of IoT and the emergence of start-ups as clients of BPO service providers will drive growth. Factors that could hinder the growth of this market in the future are skills shortages, a reduction in free trade and a rising attrition rate in the BPO services industry.
Business Processes Outsourcing Market Drivers
The key drivers of the business processes outsourcing market include:
Low-Cost Talent Pool In Emerging Markets
The availability of the low-cost talent pool in emerging market such as India, China and the Philippines supported the growth of the BPO services market in the historic period. Companies in developed economies outsourced their business processes to emerging economies such as India and China to capitalize on their affordable talent pool. In 2016, the minimum wage per month in the UK equaled to $1,724 while the minimum wage in the USA equaled to $1,257 , around 8.5 and 6 times higher than the minimum wage in India respectively, which made India attractive in the BPO services sector . The difference in wages enabled corporates to outsource non-core activities to companies in emerging markets in the historic period, increasing the BPO activities in those geographies and contributing to the growth of the market.
Business Processes Outsourcing Market Restraints
The key restraints on the business processes outsourcing market include:
Government Regulations
Government regulations towards protection of jobs in the historic period negatively influenced the growth of the BPO services market. During 2014-2018, state and national governments enacted policies to discourage outsourcing and offshoring activities and decrease the unemployment rate in the respective countries. Many governments were also concerned about the security of customer specific data and regulations of the data that can be shared with third party companies in a different geography. For example, The Bring Jobs Home Act, the American bill introduced in July 2014, aimed at discouraging outsourcing outside the USA by granting business taxpayers a tax credit for up to 20% of insourcing expenses incurred for eliminating a business located outside the USA and relocating it within the country . The introduction of regulations discouraging outsourcing and offshoring activities outside the parent country limited the growth of the BPO services market in emerging economies.
Business Processes Outsourcing Market Trends
Major trends influencing the business processes outsourcing market include:
Increased Adoption Of Augmented Reality (AR)
Augmented reality (AR) is increasingly being adopted in the business process services industry to deliver high quality work for their clients. AR technology allows users to access specific information such as live direct or indirect views of physical real-world environments. The technology is used by organizations to train their staff which will enable them to experience real-world and real-time situations where they must perform according to the objectives and directives set by their employers. AR technology is also used in remote assistance work such as technical support, where agents can guide customers through interactive video step by step. The increased use of mobile technologies and smart devices by organizations pushed the development of AR enabled services.
Enhanced Customer Service Through Social Media
The rapid adoption of social media across the industries is opening up new opportunities in business processes outsourcing. Social media is bringing business in front of millions of customers and prospects. Now, around 3.5 billion which equates nearly 45% of the population are active social media users, leading to a major shift in consumer behavior. Social media tools provide unmatched consumer data and feedback so, organizations are looking for BPO partners to monitor brand reputation online, take part in social conversations and provide an interactive customer interface.
Opportunities And Recommendations In The Business Processes Outsourcing Market
Opportunities – The top opportunities in the global business processes outsourcing market will arise in the CRM BPO segment, which will gain $27.9 billion of global annual sales by 2022, followed by the HRO BPO and F&A BPO markets that will gain $20.0 billion and $15.9 billion respectively. The business processes outsourcing market size will gain the most in Germany at $21.6 billion. Business processes outsourcing market-trend-based strategies include automating back-end office work to enhance productivity, investing in big data analytics, and offering transparency in the services. Player-adopted strategies in the business processes outsourcing industry include reinforcing M&A strategies, investing in newer technologies, and expanding in new geographies.
Recommendations – To take advantage of these opportunities, The Business Research Company recommends the business processes outsourcing companies consider focusing on offering AR based business processes outsourcing to their clients, using the latest technological advances to improve customers’ experience, expanding in emerging markets, and leveraging social media to maximize reach.
Business Processes Outsourcing Market Segmentation
The business processes outsourcing market is segmented by service type, end-use industry, automation type, service provider’s location and by geography.
By Service Type-
The business processes outsourcing market can be segmented by service type
- a) CRM BPO
- b) HRO BPO
- c) F&A BPO
- d) Other BPO Services
The CRM BPO market was the largest segment of the BPO services market by type of service in 2018 at 33.8%. The F&A BPO services market is expected to be the fastest-growing segment going forward at a CAGR of 11.7%.
By End-Use Industry -
The business processes outsourcing market can be segmented by end-use industry
- a) Financial Services
- b) Retail & Wholesale
- c) Information Technology
- d) Manufacturing
- e) Healthcare
- f) Others
The BPO services market for financial services was the largest segment of the BPO services market by end use industry in 2018 at 36.2%.
By Automation Type -
The business processes outsourcing market can be segmented by automation type
- a) Automated BPO Services
- b) Manual BPO Services
The Manual BPO services market was the largest segment of the BPO services market by automation type in 2018 at 81.4%. The automated BPO services market is expected to be the fastest-growing segment going forward at a CAGR of 40.7% and is expected to be the largest segment by 2022.
By Service Provider’s Location -
The business processes outsourcing market can be segmented by service provider’s location
- a) North America
- b) Asia-Pacific
- c) Western Europe
- d) Eastern Europe
- e) Rest Of World
The BPO services market in North America was the largest segment of the BPO services market by service provider’s location in 2018 at 54.7%.
By Geography-
The business processes outsourcing market is segmented into
- o Western Europe
- UK
- Germany
- France
- Spain
- Italy
- o Asia Pacific
- China
- Japan
- India
- Australia
- o Eastern Europe
- o South America
- o Middle East
- o Africa
Western Europe was the largest market for business processes outsourcing, accounting for 38.1% of the global market in 2018. It was followed by North America, Asia-Pacific and then the other regions. Going forward, the fastest-growing regions in the BPO services market will be Africa and the Middle East.
Business Processes Outsourcing Competitive Landscape
Major Competitors are:
- • Automatic Data Processing, Inc. (ADP)
- • Accenture plc
- • Conduent Inc.
- • Teleperformance SE
- • Paychex, Inc.
Other Competitors Include:
- • DXC Technology Company
- • Arvato Bertelsmann
- • Tata Consultancy Services Limited
- • Genpact Ltd.
- • Concentrix
- • Syntel Inc.
- • Xerox Corporation
- • Aon Hewitt
- • IBM Corporation
- • T-System
- • HCL
- • Atos
- • Fujitsu Limited
- • Sopra Group
- • Global Payments
- • Harris BPO
- • Capgemini
- • Intelligent Office
- • Morae Global
- • Navigant Pace
- • Pomeroy
- • Virtusapolaris
- • WNS Global Pvt Ltd
- • Infosys BPM Ltd.
- • Accenture Solutions Pvt Ltd
- • Firstsource Solutions Limited
- • EXL Service
- • Hinduja Global Solutions Ltd
- • 3i Infotech Ltd
- • Convergys Philippines Inc
- • 24/7 Customer Philippines Inc
- • Telephilippines Inc
- • Sutherland Global Services Philippines Inc
- • Sitel Philippines Corporation
- • WITH BPO
- • Acquire BPO
- • Cyfuture
- • TSA Group
- • Maykor
- • Auriga
- • Rödl & Partner
- • Okin BPS
- • Stefanini
- • TIVIT
- • Apdata
- • Altoros
- • Zarego
- • Cinetix Group
- • Digitel Corporation
- • Cupola Group MEA
- • Unit One
- • Bynet Semech
- • UnitedLex
- • Contact Center Company
- • ETISAL International
- • Integreon
- • Outworx Contact Centre
- • Aegis
- • SA Commercial
- • CATS Tanzania
- • Aplite Consulting
