A recently released Business Process Outsourcing (BPO) Market report indicates significant continued growth in the BPO sector over the next decade. The results of the study on which the report is based show an expected growth from the 2022 market of $245.9 billion to $544.8 billion in 2032, an 8.5% compound annual growth rate (CAGR).
The report includes market analysis by service type (finance and accounting, human resources, procurement and supply chain management, customer services, and other), operating model (cloud vs. on premises), end-user type (banking, financial services, and insurance (BFSI); healthcare; manufacturing; IT and telecom; retail; and other), and region.
We include some highlights of the BPO Market report below, including findings from the 2022 market and trends predicted for the forecasted period of 2023–2032.
- 2022 BPO market analysis based on BPO revenue share:
- Top Service Type: Customer Services (estimated 31% of BPO market share by 2032)
- Top Operating Model: Cloud (estimated 69% of BPO market share by 2032)
- Top End-User Type: IT & Telecom (estimated 34% of BPO market share by 2032)
- North America accounted for 35% of BPO revenue share
- In addition to traditional BPO drivers such as cost savings, technological advancements, flexibility, and scalability, the report finds that increased governmental support, access to experienced and skilled workers, and focus on business continuity planning post–COVID-19 have also contributed to growth in the industry.
- Factors contributing to North America’s high growth, projected at 9.7% CAGR during the forecast period, include demand from large technology companies, widespread adoption of cloud technologies, and more custom-tailored BPO service offerings.
- Factors contributing to the Asia-Pacific region’s even higher growth rate, projected at 10.2% CAGR, include internal labor cost challenges, increased need for skilled workers, and consistent digital investments by market players over the forecast period.
- Threats of cyber crime and information security risk, along with increasing labor costs and regulatory changes in countries to which services are frequently outsourced, are some of the most commonly identified threats to the BPO market.
Dedicated Tech & Sourcing readers will recall that we recently discussed some drivers in the rise of BPO and the ways in which the industry is evolving, including The Rise of Next-Gen Business Process Outsourcing: Process Optimization, Digital Innovation, and Outcome-Based Models.
Many of the “next-gen” BPO concepts we addressed in that post were specifically referenced in this report as market trends: the continued shift to the cloud and adoption of cloud-based solutions, implementation of robotic process automation (RPA) or bots and artificial intelligence/machine learning (AI/ML) technologies, and an emphasis on customer/user experience.
While more BPO dealmaking means more opportunities to achieve those objectives, customers will need to ensure that their BPO contracts are tailored to meet these goals and reflect the current market.
See our recent post, Next-Gen Business Process Outsourcing: Key Contracting Issues to Consider, for a discussion of key contractual considerations for BPO transactions.
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