BPO & Outsourcing Industry Situation & Future Projections

Industry Situation & Projections for Outsourcing & BPO

Outsourcing is practiced by Fortune 500 companies and the global outsourcing process has become one a key strategic initiatives for successful enterprises. In countries such as India and China; Fortune 500 companies are buying and transforming corporate structure to rely largely on BPO processes.

A key initiative for the most successful business organizations is the foresight to adapt business models prior to the majority of the respective industry. Existing BPO SME Service Buyers gain many strategic advantages with the outsourcing process, including scalable staffing, reduced liabilities and high level high quality output by Service Providers.

The increase in financial performance from outsourcing business services has increased the speed of the offshoring trend.  In fact, 40% to 50% of the world’s 500 largest companies leverage the outsourcing process for a majority of business operations.  Common outsourcing practices now include all industry sectors, rather than a narrow focus on information technology outsourcing.

The major BPO outsourcing trends now include operations in marketing, sales, human resources, corporate financials, accounting services, customer support and office administration. Studies indicate offshoring BPO processes can yield a 50%-85% increase in cost effectiveness when compared to home-shore (3rd party domestic providers) and traditional in-house staffing.

The large BPO vendors are largely Indian and include the likes of Infosys, Wipro and Tata. The target market for these firms will generally include large enterprises with annual revenue that exceeds $1USD billion annually. Small and Medium Enterprises are not actively prospected and generally remain off the corporate radar. Even when SMEs actively approach industry giants, businesses will generally dismiss the perspective SME clients “too small to bother with.”

A large market gap for smaller firms remains (tier 2 and 3 BPO Service Buyers) and Service Buyers are left without a viable big player option for BPO services. Factors provided by the BPO process such as efficiency, cost control and can result in the success or failure of SMEs during difficult economic times. With this in mind, the SMEs that capitalize on offshoring functions will emerge from in a resilient position.
Unlike large corporations that have scaled up BPO efficiencies, SMEs are in the early stages of outsourcing BPO functions. Small firms that are outsourcing business operations, largely have operations limited to call centers, client support and basic IT work.

Small & Medium Enterprise BPO Deal Statistics

SME Deal Projections 2010 - 2012

The SME Outsourcing Deals chart displays the market the growth between 2007 and 2011, where the chart predicts a 2011 valuation of $11USD billion.
Business Model for Outsourcing & BPO
Outsourcing Acceptance Spurs Profits
The countries that adopt the outsourcing business model and are on the leading edge of IT innovation will emerge from the recession with a leaner business model and an increased market share.

The evolving market has resulted in a substantial number of high quality SME Service Providers with recognized reputations during the past year. Similarly, business associations have created standardized testing systems and certification that can establish a level of trust between two unfamiliar SME parties. The certifications standardize skill sets and assure Service Buyers of a high quality finished result.
BPO Market Segmentation

uF has targeted three market segments; small-businesses, medium-sized business and individual freelancers.

The first two segments include companies of various sizes (typically 2-100 staff). Given the current business climate, corporate downsizing is a common occurrence with Service Buyers. The downsizing benefits uF by decreasing the Service Buyer in-house skill sets and directly results in an increase in specialty requirements from Service Providers.
The uF projections estimates a majority of the service transactions on the website will be between SME Service Buyers and Providers, rather than freelance professionals.

The third customer segment involves individual Service Providers, which are often referred to as “Freelancers.” Freelance professionals can be attractive to perspective Service Buyers, because Freelancers are typically specialists in a particular area. In addition to specialized services, the services provided by individual freelancers will include virtual assistant and technical writing roles. The use of a Freelancer will also creates a more personalized experience, similar to hiring an executive assistant.