by Paragraph: The business process outsourcing (BPO) market involves outsourcing of critical and repetitive business functions such as finance and accounting, customer relationship management (CRM), human resources (HR), procurement, and knowledge process outsourcing (KPO) to third-party providers. BPO services help companies to improve operational efficiency, reduce costs, and focus on core business functions. Common processes outsourced include payroll services, claims processing, logistics and distribution, and back-office support.
The global business process outsourcing market is estimated to be valued at US$ 280.64 billion in 2023 and is expected to exhibit a CAGR of 9.0% over the forecast period 2023 to 2030, as highlighted in a new report published by Coherent Market Insights.
Market Dynamics:
One of the key drivers fueling the growth of the business process outsourcing market is the cost-effectiveness of outsourcing business operations. Outsourcing non-core operations such as HR, finance, and customer support can help companies reduce operating costs significantly by eliminating overheads such as infrastructure, software, and employee salary costs. BPO vendors are able to deliver the same processes at a much lower price by achieving economies of scale. This allows companies to focus budgets on innovation and core competencies. Outsourcing operational processes also provides flexibility to scale up or down outsourced functions based on business needs without major capital investments. The rising need for business agility and flexibility is thus driving greater adoption of BPO services.
Segment Analysis
Business process outsourcing can be segmented into IT services, back office outsourcing, voice processes, and others. Among these, IT services segment dominates the market with over 35% share due to growing focus of organizations towards streamlining their business processes and operations using advanced IT infrastructure. IT services segment is expected to remain the dominant segment during the forecast period as well owing to continuous innovations in technology and increasing digitalization across industries.
PEST Analysis
Political: The business process outsourcing market is positively impacted by supportive government policies and regulations towards outsourcing in many regions. However, protectionist policies in some countries pose a challenge.
Economic: Economic growth, rising wages, and cost optimization are major drivers for the market. The Covid-19 pandemic had initially disrupted the market but demand recovered swiftly owing to healthcare and essential services outsourcing.
Social: Changing demographic trends and growing acceptability of outsourcing is boosting the market. However, job losses due to outsourcing also remain a concern in some regions.
Technological: Technological advances such as cloud, big data, automation, and AI are fueling innovation and market growth. Technologies enable expansion to new domains and delivery models such as work from home.
Key Takeaways
Global Business Process Outsourcing Market Size is expected to witness high growth at a CAGR of around 9% during the forecast period.
Regional analysis: Asia Pacific region is emerging as the fastest growing regional market for business process outsourcing. Countries such as India, China, and Philippines are dominating Asia Pacific market due to availability of proficient workforce, low wages, and government efforts to encourage BPO sector development through initiatives such as special economic zones and tax benefits. India has been a traditional leader in providing low-cost skilled resources to global BPO companies. China is also gaining significance due to improving capabilities and connectivity.
Key players operating in the business process outsourcing market are Kerry Group plc, Takasago International Corporation, Sensient Technologies Corporation, Symrise AG, Givaudan SA, Firmenich International SA, Frutarom Industries Ltd., Citromax Flavors, Inc., and International Flavors & Fragrances Inc. These companies are focusing on expanding their capabilities and domains through mergers, acquisitions and innovative service offerings.
*Note:
1. Source: Coherent Market Insights, Public sources, Desk research
2. We have leveraged AI tools to mine information and compile it
