Business Process Outsourcing Market Size, Share & Trends Analysis Report By Service (Finance & Accounting, Human Resources, KPO, Procurement & Supply Chain), By End Use, By Region, And Segment Forecasts, 2020 - 2027

Industry Insights

The global business process outsourcing market size was valued at USD 221.5 billion in 2019 and is expected to witness a CAGR of 8.0% over the forecast period. Reduced international trade barriers and improved telecommunication and IT capabilities have led to a situation where organizations are increasingly interlinked with each other for carrying out business. Moreover, organizations are focusing on reducing the cost of conducting business to access global resources to meet the demands of the industry. Thus, organizations are leveraging the benefits of outsourcing and are focusing on core competencies, thereby generating avenues in the market for business process outsourcing.

The major operations offered by Business Process Outsourcing (BPO) services include business administration, supply chain management, sales, marketing, and customer care services. The players in the market for business process outsourcing are engaged in providing reliable and cost-effective services across various industries and sectors such as BFSI, manufacturing, retail, IT and Telecommunications, and healthcare. The aforementioned industries comprise a few of the major application areas of business process outsourcing, and companies operating in these verticals prefer to incorporate business process outsourcing are part of their business strategy, in order to allow them to focus on their fundamental business activities and ultimately increase their profitability.

The business activities of an organization are classified into critical activities, core activities, and non-core activities. Core activities are the company’s primary competencies that give the company a strategic advantage. Critical activities require specialized skill-set. Similarly, non-core activities are the supporting activities that largely involve relationship management between consumers and products. Classifying these activities is vital in order to allocate resources appropriately to ensure timely delivery of services. Nowadays, companies have begun to place greater emphasis on core activities with a view to maintain their market presence and expand their customer base, which results in outsourcing of resources for non-core activities.

Companies engaging in business process outsourcing can choose to outsource specific services or business functions based on their individualistic requirements. These services include payroll, IT, logistics, and legal services. Reduction of labor costs as well as reducing and/or eliminating overheads arising from human resource and equipment are some of the potential benefits of outsourcing. Furthermore, business process outsourcing services offer higher flexibility as it enables businesses to retaliate faster to changing market dynamics by adapting the BPO processes as the market changes. For instance, organizations don’t have to invest in high capacity in-house servers or need not be concerned about outdated technologies.

Services such as training and recruitment require additional efforts and time. Owing to this, some companies prefer to outsource human resource services. For instance, Accenture is one of the pioneers engaged in offering human resources and finance and accounting services. The company’s human resource service include workforce performance, recruitment, payroll, benefits and compensation, and other learning and employee services. The company’s human resource services cater to clients such as Microsoft, General Motors, IBM, and Goodyear.

Service Insights

The service segment has been further segmented into finance and accounting, human resources, knowledge process outsourcing, procurement and supply chain, customer services, and others. The others segment includes legal and tax, logistics, and training. The customer services segment held the largest market share over 30.0% in 2019 and is predicted to register highest growth rate over the forecast period. The customer service BPOs are specialized in handling customer queries that are generated through chat, email, social media, phones, and other channels.

Growing establishment of service centers that require online and offline technical support are fueling the growth of the customer service segment. Furthermore, the finance and accounting segment is expected to grow at a significant rate over the forecast period owing to increasing presence of banking facilities and stringent regulatory requirements in the banking sector resulting in requirement of outsourcing services. The finance and accounting services include internal audit, capital budgeting, general accounting, treasury risk and management, and tax services.

End-use Insights

The BPO industry offers its service across various end use industries such as BFSI, healthcare, manufacturing, IT and telecommunications, retail, and others. The others segment includes travel and transportation, government, education, construction, and utilities. The BFSI segment secured a market share exceeding 30.0% of the global business process outsourcing market in 2019 and is anticipated to grow at the highest rate from 2019 to 2027. Owing to customers focusing on services such as service expediency, real-time interactions, and faster complaint resolution have resulted in BFSI companies to outsource customer service activities.

Meanwhile, following the BFSI segment, the IT and telecommunications segment is expected to exhibit the second highest CAGR exceeding 8.0% owing to the growth of IT companies and rapid industrialization across the globe. Additionally, support from government to improve the global economy by encouraging other sectors such as banking and healthcare to boost their investments in technology is expected to fuel market growth. For instance, according to National Association of Software and Services Companies (NASSCOM), a trade association for the information technology industry in the Indian BPO market stated that the IT-BPO industry was valued at USD 12.0 billion and is expected to reach USD 118.0 billion by the end of 2018.

Regional Insights

The European market for business process outsourcing accounted for more than 26.0% of the global market share in 2019. The regional market growth is accredited to the provision of flexibility and customization of the service offerings in order to better meet individual needs coupled with rising demand for cloud computing technology. Additionally, availability of skilled workforce coupled with quality of service and operational efficiency are the major factors that are driving the companies to outsource their business processes to the European countries.

The Latin America market for business process outsourcing is projected to witness a CAGR exceeding 6.0% over the forecast period. The regional market growth is ascribable to rising growth of the manufacturing and Consumer Packaged Goods (CPG) industries in this region. Additionally, increasing support from the Latin America government towards promotion of English language learning programs in order to gain attraction from global service providers in several Latin American countries is also anticipated to propel market growth. The cost-effective pricing structure and Spanish and Portuguese language skills are further generating avenues in the market for business process outsourcing in Latin America.

Business Process Outsourcing Market Share Insights

The competition in the market for business process outsourcing results from the presence of major global players such as Accenture, Infosys Limited, HCL, Wipro, Capgemini, and Amdocs. A diverse range of services allows companies to gain a competitive edge in the market for business process outsourcing.  For instance, Capgemini, one of the pioneer in the BPO industry is engaged in offering multiple BPO services such as financial services, supply chain and procurement, and business analytics.

These market players particularly focus on entering into mergers and acquisitions and joint ventures/collaborations in order to enhance their market presence. For Instance, in July 2018, Wipro Limited announced the acquisition of Alight HR Services in India for a total deal value of USD 1.5 billion. The company offers human resource outsourcing, IT outsourcing, and finance process outsourcing. Companies are focusing on setting up new BPO centers across the globe to expand their market presence and augment their existing customer base. For instance, in September 2017, Infosys Limited announced the establishment of a new service center in Netherlands. This office will be engaged in providing finance and accounting and other end-to-end outsourcing services.

Report Scope

Segments Covered in the Report

This report forecasts revenue growth at the global, regional, and country levels and provides an analysis of the latest industry trends from 2016 to 2027 in each of the sub segments. For the purpose of this study, Grand View Research has segmented the global business process outsourcing market report based on service, end use, and region:

• Service Outlook (Revenue, USD Billion, 2016 - 2027)

  • Finance & Accounting

  • Human Resources

  • Knowledge Process Outsourcing

  • Procurement & Supply Chain

  • Customer Services

  • Others

• End-use Outlook (Revenue, USD Billion, 2016 - 2027)

  • Banking, Financial Services, and Insurance (BFSI)

  • Healthcare

  • Manufacturing

  • IT & Telecommunication

  • Retail

  • Others

• Regional Outlook (Revenue, USD Billion, 2016 - 2027)

  • North America

    • U.S.

    • Canada

  • Europe

    • U.K.

    • Germany

    • France

  • Asia Pacific

    • China

    • India

    • Japan

    • Singapore

    • Malaysia

  • Latin America

    • Brazil

    • Mexico

  • Middle East & Africa