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Asia-Pacific BPO market rosy: IDC

Carol Ko | July 28, 2009
Value-add functionalities, through platform business process outsourcing, such as standardisation, scalability, and economies of scale, fit well in the CFO's agenda

HONG KONG, 27 JULY 2009 Significant business transformations are being implemented by Asia Pacific organisations, in preparation for the impending market recovery in 2010, according to research firm IDC.

Concurrently, the research body says BPO service providers are doing away with the traditional lift and shift business models. They are ironing out platform-based service offerings to suit current market conditions.

Given this, IDC expects to see long-term market growth in the APEJ BPO market starting next year. Based on 2009-2013 market forecasts and analysis, a compound annual growth rate (CAGR) of 11.2 per cent is expected - from US$17 billion in 2008, to US$29 billion in 2013 - lead by platform BPO services.

IDC believes that domestic markets in emerging economies are particularly well positioned. For example, the Indian market, boosted by BPO entering the mainstream plus a strong domestic demand, will likely see 17 per cent growth in the next year, especially from the telecommunications sector, and by transformational process activities including platform BPO.

Suchitra Narayan, research manager for IDC's Asia/Pacific IT Services Research, said that traditional BPO business models with full-time equivalent (FTE) pricing, as well as providing pure cost arbitrage advantage, are now taken for granted rather than being perceived as a significant benefit of BPO services.

Fitting the CFO's agenda

"The BPO market, especially platform BPO, will see increased adoption that will be accelerated, to an extent, by the current economic downturn," said Narayan. The value-add brought by platform BPO such as standardisation, scalability, economies of scale and pay-as-you-use functionalities are areas that fit well in the CFO's agenda in today's market.

We are seeing an increasing demand for BPO vendors that are able to go the extra mile and transform businesses as well as contribute to growth as opposed to traditional models.

Narayan said that with the current global economic conditions, any increase in capital expenditure (capex) requires significant internal justification, and operational expenditure (opex) is becoming the main focus for sustaining business direction.

IDC believes there is a need to, not only optimise infrastructure, but also to re-think the strategic impact of individual business processes. Anything that is a core process will be retained and all non-core processes will be considered for outsourcing.

The need to manage costs, maintain efficiencies, and focus on sustainability are factors driving the market and creating an increased interest and awareness for platform BPO.

The pay-as-you-use, scalability and software-as-a-service (SaaS) offerings are ideally suited for this economic environment. Organisations are re-assessing capex investments and aligning strategies to an opex model into which platform BPO fits perfectly.

Additionally, platform BPO also enables small and medium-sized businesses to outsource some of their non-core activities at a nominal opex, with the scalability factor built in, should their growth in business demand the same.

 

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