Learn about the reasons behind the growth of BPO industry and its future prospects.
Business Process Outsourcing (BPO) is a specialized industry segment that offers a wide range of services to both established as well as start-up companies, through a combination of traditional outsourcing, co-sourcing, and nearshore delivery models. The process involves outsourcing a company’s operational, back office and sometimes front office business functions to a third-party company for gaining several operational advantages. It is a cost-effective way for organizations to handle their various business operations efficiently by engaging specialized service providers.
Without doubt, the popularity of BPO is growing and the global BPO sector is projected to record a compound annual growth rate of 8.5% from 2021 to 2028. Organizations in the manufacturing sector widely use outsourcing to get their products manufactured from countries with cheaper labor. The most common example of this is Apple outsourcing the production of their iPhones to China. However, the BPO industry is not limited to manufacturing. Businesses are also increasingly outsourcing tasks related to their core services.
This article will explore more about the growth and future of the BPO industry.
Reasons behind the boom of BPO industry
There are many factors that make outsourcing attractive for businesses.
Outsourcing allows businesses to maintain a competitive advantage. Companies can save time and money by engaging a BPO company to handle their non-core activities. Instead they can channelize their efforts into critical business functions and maximize the ROI.
A BPO company offers the advantages of flexibility and scalability to its clients. Businesses can achieve significant cost savings since there is a huge reduction in direct recruitment and employee training. Apart from this, outsourcing helps companies to leverage the expertise and infrastructural strengths of the service provider. They can be assured of quality output at reasonable prices.
The future of the BPO industry
The industry’s size and momentum are such that it is easy to understand why some refer to it as ‘the new normal’. Today, BPO is the key way through which corporations operate. The trend towards outsourcing has transformed how businesses operate and we are in an age where we see companies use outsourcing to execute their entire operations.
The global outsourcing market size was $232.32 billion in 2020. The key factors that have contributed to the growth of the segment are the business need to reduce operational costs, increase agility, focus on core competencies, retain competitive advantage, and improve the operational efficiency.
During 2020, the customer services segment emerged as dominant and had a revenue share of more than 31%. This was primarily due to the growth of customer service centers that are skilled in handling all types of customer support requirements.
Human resource segment is also projected to grow steadily and dominate the BPO industry. The increasing demand for human resource services such as recruitment, payroll processing, performance appraisal etc are expected to work in its favour.
We can also expect significant growth in the finance and accounting segment, telecom sector, and BFSI segment. The telecommunication segment recorded a revenue share of 34% in 2020 due to the rapid industrialization and growth of the IT industry.
Between 2021 and 2028, the Asia Pacific regional market is projected to record the highest CAGR. This growth spurt is attributed to the availability of talented professionals, low labour costs, and the significant infrastructure investments by the authorities in the region.
Outsourcing is now recognized as a crucial part of a company’s business strategy and therefore, a constantly evolving sector. Some organizations are even taking steps to embrace innovative business models such as bringing their business activities closer to home. The BPO industry has seen an exponential rise in recent years, and has a lucrative future in store.
SBL is a globally reputed BPO service provider with a strong track record of successfully handling end-to-end business operations of reputed clients. Get in touch with our BPO division to know more about our services.