Bangkok--28 Jul--IDC
Organizations in the Asia/Pacific excluding Japan (APEJ) region are currently implementing significant business transformations, including seeking new business process outsourcing (BPO) business models and services that will have a direct impact on bottom lines and transform businesses, in preparation for the impending market recovery in 2010. Concurrently, BPO services providers are ironing out platform-based services (Platform BPO) offerings to suit current market conditions and are doing away with the traditional lift and shift business models. Given these movements in the market, IDC expects to see long-term market growth in the APEJ BPO market starting 2010. Based on forecast and analysis of the market between 2009-2013, the market is predicted to grow at a compound annual growth rate (CAGR) of 11.2% from US$17 billion in 2008 to US$29 billion in 2013 lead by Platform BPO services.
The domestic markets in the emerging economies are particularly well positioned to see rapid growth during this period. For example, the Indian market, boosted by the adoption of BPO entering the mainstream, a strong domestic demand especially from the telecoms sector, and transformational process activities including Platform BPO, will see strong growth of 17% from 2009 to 2010.
Suchitra Narayan, Research Manager for IDC’s Asia/Pacific IT Services Research, maintains that traditional BPO business models with full-time equivalent (FTE) pricing as well as providing pure cost arbitrage advantage are now taken for granted rather than being perceived as a significant benefit of BPO services. "The BPO market, especially Platform BPO, will see increased adoption that will be accelerated, to an extent, by the current economic downturn. The value-add brought by Platform BPO such as standardization, scalability, economies of scale and pay-as-you-use functionalities are areas that fit well in the CFO's agenda in today’s market. We are seeing an increasing demand for BPO vendors that are able to go the extra mile and transform businesses as well as contribute to growth as opposed to traditional models."
With the current global economic conditions, any increase in capex requires significant internal justification, and opex is becoming the main focus for sustaining business direction. There is a need to not only optimize infrastructure, but also to re-think the strategic impact of individual business processes. Anything that is a core process will be retained and all non-core processes will be considered for outsourcing. The need to manage costs, maintain efficiencies, and focus on sustainability are factors driving the market and creating an increased interest and awareness for Platform BPO. The pay-as-you-use, scalability and software-as-a-service (SaaS) offerings are ideally suited for this economic environment. Organizations are re-assessing capex investments and aligning strategies to an opex model into which Platform BPO fits perfectly. Additionally, Platform BPO also enables the small and medium-sized businesses (SMBs) to outsource some of their non-core activities at a nominal opex, with the scalability factor built in, should their growth in business demand the same.
BPO vendors today are moving to offer complete end-to-end solutions of people, processes, technology and analytics. With the emergence of the new "risk-reward share" type business models, there is an increased expected risk exposure for BPO vendors. The vendors stand to gain from continuous process improvements that they are able to provide clients on an ongoing basis and for initiating or improving processes that impact customer revenue. BPO is no longer viewed as a mere cost arbitrage tool but as a potentially strategic transformational service.
“Sustainability of organizational change, in the area of cost management, is a key mantra for organizations poised for recovery. Currently, there is an increased focus in the market on outsourcing as a means to improve ongoing business processes and generate efficiencies all around. BPO vendors that offer strategic solutions of transforming the business with a direct impact on the revenue or profit lines will see an increase in a demand for their services. Fitting in with this need for business transformation, vendor engagements are also moving away from a traditional contractual arrangement to a more intimate, partnership type engagement,” Suchitra adds.
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