Estimating the business process outsourcing market size

Estimating the business process outsourcing market size

Size matters.

Market size estimation has become an essential requirement for any business. In a free market society, people, business, and companies are always on the lookout for an unserved or underserved niche to step into and make their mark in. Not merely from the perspective of stepping into a new niche, but also from the perspective of understanding the depth or shallowness of the market one seeks to do business in.

The business process outsourcing market size, or BPO market size, similarly, is the subject of much study and contemplation for companies who are either active players or seeking to become one. They need to know if the size of the market provides enough opportunity for players like them. They need to know if the trends show a growth in the industry, which means it can accommodate more players or the growth ambition of existing players. If not growing or contracting, players need to evaluate the options for continuance.

Are they better placed than their competitors to be able to continue serving the market in a profitable manner?

This is perhaps more of a provider perspective. Market size also has relevance for the client, or buyer, or outsourcer, the one who is seeking the service.

From a seeker’s perspective, market size estimation conveys the depth, or shallowness of the market. It provides information to the seeker if it is well established, are there competing providers trying to differentiate themselves in the space, and how do their own competitors interact with this marketplace. Are they already laggards in this space or are they trying to do something that nobody else thinks is a good idea?

With the help of a leadership team that has over 20 years of hands-on industry experience, oWorkers has been able to make a splash in the industry right from the word go. In a short span of eight years, they are already ranked as one of the top three providers in their chosen area of data based BPO services.

 

The challenge in estimating business process outsourcing market size

Which market?

This is a question that often arises when one does this exercise?

The BPO engagement model is very clear and perhaps easy to understand. A business process that a company follows is outsourced to a provider who claims it will do it better. The definition of better is usually in terms of faster, cheaper and with better quality, or some combination of the three. The process chosen for outsourcing usually meets some criteria defined by the client such as being non-core, possessing adequate volumes, etc.

The ’market,’ and ‘market size,’ however, do not lend themselves with such ease to being understood within a framework.

Why is that?

Firstly, the business process outsourcing industry cannot be viewed as a traditional industry ‘vertical.’ It is almost like a functional ‘horizontal’ that operates with all other, or many other industries. It might be doing Finance and Accounting work for a company making bottled soft drinks, it could be doing Recruitment Process Outsourcing for another company that manufactures sheet glass and it could be doing data annotation for a company building an Artificial Intelligence (AI) model.

Secondly, as seen above, the scope is huge, and it keeps changing. Some of the most popular services today are social media moderation and data annotation and maintenance of e-commerce product displays and catalogs, which have emerged in the last ten to fifteen years as a result of developments in other areas such as introduction of social media sites and accelerating work on AI models and the popularity of online shopping.

Thirdly, lines are blurred. What should an estimation of business process outsourcing market size consist of? Anything and everything can be considered as business process outsourcing. Where does one draw the line? Should the Finance and Accounting support provided by one company to another be classified under the BPO industry or under the Finance and Accounting industry?

The lack of uniformity and standardization causes challenges in aggregation. Without a significant global body to guide the industry, data is collected at the national level. Thereafter, consolidation globally can be challenging as the underlying definitions and assumptions could vary from one country to another.

Despite the challenges and shifting sands, the one thing that has remained constant is the criticality of people for the industry. oWorkers has ensured that they are identified as a preferred employer in each of the communities they operate in. This gives them access to an unmatched supply of talent to feed all the client projects they run.

 

Analyst estimates of the business process outsourcing market size

The show, however, must go on. Challenges have to be surmounted and solutions found.

Business analysts are in the business of studying industries and trends and also often offer views on the future trajectory of an industry. Here are a few analyst estimates as well as projections on the future of the industry:

Gartner (published August 2019)

“The $154.5 billion business process outsourcing market is forecast to grow at a five-year CAGR of 3.5% in U.S. dollars (3.9% in constant currency) through 2023. The market will be driven by robotic process automation, digital services and artificial intelligence.”

Operating 24×7 for clients, oWorkers is geared to meeting client requirements in 22 languages.

Fact.MR (published March 2020)

“Global business process outsourcing market will grow at an impressive 7.5% CAGR during the forecast period. Cut-throat competition coupled with rise in demand for convenient consumer complaint redressal is set to propel the business process outsourcing (BPO) market.

Organizations are increasingly looking for specialized companies that provide the much-needed support services to business processes without direct investment of dedicated time and human resources.

From banking, financial services, healthcare, to manufacturing, every industry employs business process outsourcing in some capacity.

Resultant benefits such as reduced operational costs, improved efficiency of support functions such as customer services is driving growth within this industry.

Facilitated by enhanced inter-connectivity of businesses, BPO has amassed C-suite confidence to deliver relevant, reliable, and 24/7 support to essential business processes.

The shift of focus from monopolistic business strategies to shared workload business culture is spurring demand for business process outsourcing for improved results and continued success.”

With both present and past staff rating the company well on external platforms such as Glassdoor, with 4.6 out of 5 being the average, oWorkers looks forward to the future with optimism.

Grand View Research Inc. (published April 2021)

“The global business process outsourcing market size is projected to reach USD 435.89 billion by 2028, registering a CAGR of 8.5% during the forecast period. The demand to reduce operational expenditures associated with non-core activities and increasing focus on core competencies across several end-use verticals are factors contributing to the market growth. Moreover, the increased preference of new-age organizations for handling core business functions in-house and outsourcing support functions to third-party vendors for better growth prospects are expected to drive the market.

To grow and remain relevant, businesses are required to constantly evolve to fully orchestrated and intelligent processes that consider employees, customers, business partners, and suppliers alike.”

Having chosen the employment model, and not the freelancer or contractor ones, the development and growth of internal staff into positions of greater responsibility, gives oWorkers the bench strength to continue to excel.

Brand Essence Research (published June 2021)

“Business Process Outsourcing (BPO) Market is valued at USD 187.91 Billion in 2018 and expected to reach USD 314.81 Billion by 2025 with a CAGR of 7.65% over the forecast period. Rise in corporate profit, availability of a low-cost talent pool in emerging economies and technological transformations in the retail and e-commerce verticals are some factors driving the growth of the market. The growing need to increase operational efficiency in order to remain competitive in the market is one of the key factors that enterprises are turning to third-party BPO service providers.”

The ability to ramp up and down at short notice, that clients get with oWorkers, can be a differentiator as it saves them the trouble and cost of retaining an unproductive bench. With the ability to hire 100 people in 48 hours, oWorkers makes it possible.

Global Industry Analysts Inc. (published August 2021)

“Amid the COVID-19 crisis, the global market for Business Process Outsourcing (BPO) estimated at US$161.9 Billion in the year 2020, is projected to reach a revised size of US$215.9 Billion by 2026, growing at a CAGR of 5.2% over the analysis period. Customer Services, one of the segments analyzed in the report, is projected to record a 4.2% CAGR and reach US$69.4 Billion by the end of the analysis period. After a thorough analysis of the business implications of the pandemic and its induced economic crisis, growth in the Human Resources segment is readjusted to a revised 4.5% CAGR for the next 7-year period. Customer services BPO includes outsourcing services aimed at offering support for client’s customer care operations as well as business processes pertaining to the customer contact center. This segment has now emerged as a major approach to deal with advanced, value-added functions that include customer care and analytics, consulting and implementation, and training and support. Human Resources (HR) BPO or HRO refers to the integrated operation and delivery of several HR processes, which are performed by a service provider on a contract basis. Common services covered as part of HRO contracts include employee benefits, payroll, recruitment, compliance, and training and development.”

The pricing model of oWorkers, which gives a choice to clients, makes it suitable for changing conditions and makes them future ready.

 

How does a company use this information?

It is not a surprise that the estimation of the business process outsourcing market size varies from one consultant to another. The encouraging part for all current as well as hopeful future players is that analysts are united in their view that the industry has a bright future. The growth rate might range between 4% and 9% CAGR but as long as it is not a minus 4 to minus 9 rate it is a great place to start. Also, the global size is in the hundreds of billions of dollars, making it a powerful industry with far-reaching impact that policy-makers cannot ignore.

The information most analysts put out is usually of an aggregated nature. It pertains to the industry as a whole. But, in an industry of this scale, nobody operates at the industry level, each individual player carves out a space within which it operates, buyer or seller. Some become bigger than others but then that is not unique to this industry.

The objective of seeking information on trends and sizes is to ensure one’s own future success. Hence, an individual player needs to go down to the level of its operation to be able to extract meaningful, actionable information.

If the company specializes in Finance and Accounting services, for example, it must seek to understand:

  • The size and growth rate of this segment of the industry
  • Can it be further divided and each sub-segment better understood
  • Geographical variances, if any

These analyses will, hopefully, provide the business enough to base its decisions on.

With active partnership with leading technology companies, oWorkers has positioned itself to access the latest technologies, even for deployment on client projects. Your business and data are secure with the ISO (27001:2013 & 9001:2015) certified facilities of oWorkers. It is also GDPR compliant. With the basics in place, oWorkers is ready to actively participate in the growth of the industry.

 

Conclusion

If you have been associated with the industry for a long time, can you truthfully say when was the first time you could see that social moderation services and data annotation services would be important, being offered by the industry?

Or, where do you think the industry will be in 2050?

Estimating the business process outsourcing market size is a bit of crystal ball gazing and a bit of an educated view based on a watchful survey of what is happening around you every minute.

There is no single right answer but there is usually enough for companies run by dedicated, knowledgeable leaders to base their decisions on and move forward. Of course, from time to time they may even need to take a step back in order to ensure they are ready to move forward once again at the right opportunity.

oWorkers remains committed to being a driving force in the industry’s march forward, and of its clients with it. It creates significant savings opportunities for clients, many of whom report savings of almost 80% after outsourcing to oWorkers. This is particularly true for clients from the US and Western Europe and includes technology companies and unicorn marketplaces. We hope to count you as a client soon.

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