BUSINESS PROCESS OUTSOURCING MARKET ANALYSIS

The global business process outsourcing market size was valued at US$ 261.89 billion in 2022 and is anticipated to witness a compound annual growth rate (CAGR) of 9.4% from 2023 to 2030.  The market is fueled by the growing focus of organizations on enhancing business agility and surviving the continuously changing business dynamics. In addition, increased efficiency and productivity of the firms, reduced time to market for new products, and the need to lower costs are also driving the Business Process Outsourcing market. Further, the increasing use of SaaS-based solutions and the rapid adoption of process automation are accelerating the business process outsourcing market growth.

Global Business Process Outsourcing Market: Regional Insights

North America is projected to show major growth in the global business process outsourcing market over the forecast period. This is attributed to growing demand for business process outsourcing service from technology giants across the region. Moreover, the region is also witnessing need for customization of service offerings to cater the individual needs, and high demand for cloud computing. These factors are further expected to accelerate growth of the market across the region.

Asia Pacific is anticipated to exhibit strong growth in the global business process outsourcing market during the forecast period, owing to increasing demand for skilled professionals, major investments by key vendors such as Infosys, Wipro, Accenture, and others in digitization. For instance, in December 2020, HCL Technologies Limited expanded its business to Vietnam, which will allow the company to hire highly trained experts and offer improved IT solutions in the country.

Figure 1. Global Business Process Outsourcing Share (%), By Region, 2022

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Global Business Process Outsourcing Market Drivers:

Rise in popularity of cloud computing to boost growth of the market

Management and back-office operations are crucial for any company. Several transactional processes such as application processing, order fulfillment, and collection and billing leads to accumulations of large amount of data in companies. This further creates demand for advanced back-office solutions for handling such large amount of data. As inclination toward adoption of cloud computing in business process outsourcing is increasing across several organizations, the global business process outsourcing market is likely to show robust growth in the near future.

Increasing shift to outsourcing services to accelerate the market pace

Business operations of a company are divided into core, critical, and non-core activities. Core activities are main competencies of a company that offer a strategic advantage, while critical activities need specialized skill-set. Non-core activities whereas are supporting operations that involve mainly relationship management between products and consumers. Customization of these activities is crucial for allocating resources properly to further ensure in-time service deliveries. For this, companies are increasingly shifting toward adoption of outsourcing services, which further expected to support growth of the global business process outsourcing market over the forecast period.

Global Business Process Outsourcing Market Opportunities:

Emergence and development of next-generation services to create growth opportunities in the global business process outsourcing market. Business process outsourcing provides business with the means of efficiently increasing profits and reducing costs. The advantages of novel technologies such as cloud computing, process automation, and social media among others is encouraging business to adopt BPO services. Thus, emergence of next generation services is further offering lucrative opportunities in the market.

Growing focus on multi-workflow scheduling is anticipated to generate multiple business opportunities in the global business process outsourcing market over the forecast period. In the early times, automated workflows were mainly adopted only by wealthy companies that could heavily invest in ERP and CRM systems. However, the cloud technology emergence has made automation possible for all types of organizations. With the adoption of this technology, companies began to leverage their power for automating the complex workflow process in order to obtain process integration. Business Process Outsourcing in recent years has significantly expanded, as the awareness about its benefits is growing in companies. This is further creating multiple opportunities in the market.

Global Business Process Outsourcing Market Trends:

Adoption of inorganic growth strategies by market players is a major growth

Major players in the global business process outsourcing market are engaging in inorganic growth strategies such as partnerships, mergers & acquisitions, and regional expansion. For instance, in September 2022, Capgemini completed acquisition of Aodigy Asia Pacific, which allows Sales force consumer engagement solutions such as cloud migration, customer interaction, sales optimization, and business process automation through its operations in Singapore and Vietnam. Such inorganic growth strategies by market players are likely to continue in the market.

Emergence of innovative technologies is also trending in the market

Business process outsourcing service providers offer various services with cost-effective solutions in conventional way. With emergence of novel advanced technologies such as Artificial Intelligence, BPO services are changing process by accelerating growth and reducing costs. Increasing number of companies are investing in these novel technologies for reducing cost of infrastructure and office space. This trend is likely to continue in the global business process outsourcing market over the forecast period.

Global Business Process Outsourcing Market Restraints:

Increasing concerns around security to limit the market growth

The use of business process outsourcing services poses various threats. These services are vulnerable to security threats such as malware, data theft, or hacker attacks. Such hazards adversely impact value of a company, such as profit, shareholder value, or reputation. This in turn create hesitancy among consumers regarding adoption of BPO services. This factor is further expected to hinder growth of the global business process outsourcing market. However, product launch of advanced solutions with robust security by market players is likely to aid in growth of the market.

Diversity of process to obstruct the market growth

Different organization across different industries have varying business operations. These varying processes may require a system-to-system exchange, alteration of information, human interaction, or document creation. These processes are categorized as complex or simple to manage a considerable or limited transactions. Some of these processes can be time consuming requiring days, weeks, or even years, while other can be done within a second. Thus, such varying process may require different or multiple BPO services. This factor in turn limits growth of the global business process outsourcing market.

Figure 2. Global Business Process Outsourcing Share (%), By Service Type, 2022

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Global Business Process Outsourcing Market Segmentation:

The global business process outsourcing market report is segmented into Service Type and End-Use.

Based on Service Type, the market is segmented into Finance & Accounting, Human Resource, Knowledge Process Outsourcing, Procurement & Supply Chain, Customer Services, and Others. Out of which, Customer Services is expected to dominate the global market over the forecast period and this is attributed to the rise in number of service centers requiring offline as well as online technical support all over the world. Thus, the adoption of customer service outsourcing is increasing across various sectors, which in turn is driving growth of this segment.

Finance & Accounting segment is also expected to witness significant growth in the near future and this is owing to the increasing number of banking facilities and stringent regulatory needs in banking sector, leading to rise in demand for outsourcing services. As this service offers significant cost reduction in operation costs, the demand for these services is increasing, further driving growth of this segment.

Based on End-Use, the market is segmented into BFSI, Healthcare, Manufacturing, IT & Telecommunication, Retail, and Others. Out of which, IT & Telecommunication is expected to dominate the global market over the forecast period and this is attributed to the rise in industrialization around the world and increasing IT businesses. Telecom companies are increasingly outsourcing business functions from call-center outsourcing to billing operations for accounting and finance.

BFSI segment is also expected to witness significant growth in the near future and this is owing to the increasing adoption of BPO in financial institutions as an instrument for improving the cost efficiency. Moreover, with increasing digitalization, the need for business process outsourcing is increasing in BFSI sector, which is likely to boost growth of this segment.

Global Business Process Outsourcing Market: Key Developments

In December 2020, Accenture announced partnership with Inversis, a leading provider of technology and outsourcing service for development of outsourcing solution for financial institution in Europe. Through this partnership, Accenture to modernize existing technology platform of Inversis.

In September 2022, Infosys announced acquisition of BASE life science, with the aim of helping several global life science companies by scaling up the development of drugs and accelerating clinical trials

In March 2022, HCL Technologies Limited and NEORIS announced collaboration with the aim of providing services for clients, including increasing application usage time, business management operations, and integrated IT service.

In April 2022, CBRE Group Inc. and Microsoft Corporation entered into partnership to offer enhanced maintenance and management service solutions to retail customers.

Global Business Process Outsourcing Market: Key Companies Insights

The global business process outsourcing market is highly competitive. This is attributed to continuous launch of new technologies due to ongoing R &D and efforts by value chain participants. Moreover, key players are adopting various business growth strategies in order to expand their presence on regional as well as global basis. Some of the key players in the global business process outsourcing market are Accenture, Teleperformance SE, Infosys Limited (Infosys BPM), WNS (Holdings) Ltd., HCL Technologies Limited, AMDOCS, CBRE Group Inc., Sodexo, NCR Corporation, TTEC Holdings, Inc., Wipro Limited, and Capgemini.

*Definition: Business Process Outsourcing or BPO is the delegation of business tasks to third-party service providers, either local, nearshore or offshore. This can include administrative functions such as customer services, accounting and IT infrastructure, or front-end functions like sales and marketing.