Insights and Forecasts for the Business Process Outsourcing (BPO) Industry in 2023

by | Published on Jul 25, 2023 | Business Process Outsourcing, RPA

Business Process Outsourcing (BPO) services offer several advantages for organizations. A reliable business process outsourcing company will have expertise and experience in managing and delivering specialized business processes, which you can leverage to enhance process quality and efficiency.

According to a report from Market.US, the global business process outsourcing market that was valued at USD 245.9 billion, is expected to grow to USD 544.8 billion by 2032. Between 2023 and 2032, this market is estimated to register a CAGR of 8.5%.

The major factor that drives the market growth is the rising customer demand for quality, effectiveness, and cost-efficiency. The key trend in the market is the rising adoption of digitization and automation. This shift encompasses the growing demand for innovative services like robotic process automation (RPA) and machine learning, which enhance business processes, reduce costs, and boost overall efficiency. Another emerging trend is the utilization of cloud-based services, that enable companies to access BPO services through a flexible, scalable, and cost-effective model. Moreover, the BPO market is placing a greater emphasis on customer experience by offering services such as social media management, chatbots, and other digital customer engagement tools. Additionally, BPO providers specialize in niche services such as medical billing, legal process outsourcing, and research and analytics, catering to specific industry needs.

At the same time, the growing concern regarding cyber security and data privacy is restraining the market growth.

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BPO Market Segmentation

The market is segmented on the basis of service type, operating model, end user, and geography.

By service type, the market is divided into finance & accounting, human resources, procurement & supply chain, customer services, and others. The customer services segment stands out as the most lucrative in the market, projected to achieve a Compound Annual Growth Rate (CAGR) of 8.6%. In 2022, the customer services segment held a substantial revenue share of 31%. This segment benefits from the increasing presence of service centers worldwide that necessitate both online and offline technical support. Additionally, the finance & accounting segment exhibits significant growth in the market during the forecast period. The rising number of banking facilities and stringent regulatory requirements in the banking industry create a demand for outsourcing services, enabling businesses to overcome operational costs.

Based on the operating model, the market is segmented into cloud and on-premise. The cloud-based operating model is poised to emerge as the most lucrative segment in the market, boasting a market share of 69% and a projected CAGR of 9.2% in 2022. This model, also known as Business Process as a Service (BPaaS), uses cloud computing services to deliver BPO solutions. While traditional BPO aims to mitigate labor costs, BPaaS achieves this by embracing automation and reducing the reliance on manual labor. Additionally, the on-premise operating model is expected to witness rapid growth during the forecast period. In this model, service providers collaborate with clients’ employees, utilizing the client’s resources, infrastructure, and processes. This approach affords clients greater control and flexibility, enabling them to closely monitor operations and ensure that the outsourced functions align with their business objectives.

By end user, the market is segmented into BFSI, Healthcare, Manufacturing, IT & Telecom, Retail, and other end-users. The IT & Telecom segment stands out as the most lucrative end-user segment, driven by the increasing number of IT companies and the expanding industrialization worldwide, which generate high demand for business process services within the IT & Telecom sector. Additionally, the BFSI segment is expected to exhibit the fastest growth in the market, at a projected CAGR of 10.1% during the forecast period.

By geography, the market is divided into North America (The US, Canada, Mexico), Western Europe (Germany, France, The UK, Spain, Italy, Portugal, Ireland, Austria, Switzerland, Benelux, Nordic, and Rest of Western Europe), Eastern Europe (Russia, Poland, The Czech Republic, Greece, Rest of Eastern Europe), APAC (China, Japan, South Korea, India, Australia & New Zealand, Indonesia, Malaysia, Philippines, Singapore, Thailand, Vietnam, Rest of APAC), Latin America (Brazil, Colombia, Chile, Argentina, Costa Rica, Rest of Latin America), Middle East & Africa (Algeria, Egypt, Israel, Kuwait, Nigeria, Saudi Arabia, South Africa, Turkey, United Arab Emirates, Rest of MEA).

North America is poised to assert its dominance as the leading region in the market, commanding the largest market share of 35% and projecting a CAGR of 9.7% during the forecast period. This regional growth is driven by the escalating demand for business process outsourcing services from numerous technology companies, which is expected to continue in the coming years. Furthermore, the increasing adoption of cloud computing and the provision of customized services tailored to individual needs further fuel the growth of the market in North America. Asia Pacific is expected to register the highest CAGR of 10.2% due to its ability to overcome labor costs, the growing demand for skilled professionals, and consistent digital investments made by market players throughout the forecast period.

Major market players include Accenture PLC, Amdocs Ltd, Capgemini SE, CBRE Group, Inc., HCL Technologies Limited, Infosys BPM Limited, NCR Corporation, SODEXO S.A., TTEC Holdings, Inc., Wipro Limited, and more.

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