BPO and Outsourcing Trends

uF targets primary market of firms that buy or provide offshore business services. The offshore market perceived as the highest growth area of SME outsourcing growth is the market niche for uF.

In 2009, Gartner expects competition for outsourcing deals, particularly for standardised ITO services, to be fierce. Service Buyers will be lured by low prices from Service Providers trying to achieve quarterly revenue goals or strengthen market share.

Gartner’s Outsourcing Contract Database has suggested 76% of the contracts announced in 2008 were new contracts; the remaining percentage was a combination of contract extensions, expansions or renewals.

Out of the $35-37USD billion offshore BPO market in 2008, India remained the leading offshore destination with a 35% market share.

The Philippines barely has 1/10, but represented a healthy 15% share of the BPO market. The country has emerged as a key destination for English-based work especially for the North American market.  Growing at 46% annually since 2004, the $6.8USD billion Philippines’ offshore market employs over 450,000 people; mostly for voice-based services.

Tholons Advisory, Investments and Consulting have observed the following trends for 2009 will shape ITO, BPO and KPO (knowledge process outsourcing) business services during 2009:

1. The market downturn had a substantial impact on BPO providers during the first 3 quarters of 2009.
2. Global economic downturn will lead to increased outsourcing with healthcare, education, retail, telecom and legal process outsourcing (LPO).
3. Foreign governments have made special initiatives each respective country as an appealing offshore business destination.
4. Service Buyers continued to increase the number of outsourcing locations utilized depending on strengths of the educated populace.
5. Downward pressure has resulted in reduced rates, however has also increased the cost savings due to higher productivity.
6. Consolidation occurred for small players as focus shifts away from large deals.
7. Outsourcing revival by 2009 end – driven by small to mid-sized (SME) clients.
8. Strong focus on innovation, R&D and technology adoption will be the key differentiators for providers.
9. Outsourcing contracts are increasing in size again and reaching a new medium.

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