APAC BPO market to hit US$29B by 2013

Asia-Pacific firms' investment in business transformation will spur long-term growth in region's business process outsourcing market from next year, says IDC.
Written by Vivian Yeo, Contributor

Ongoing investments by Asia-Pacific companies in business transformation will spur long-term growth for the region's business process outsourcing (BPO) market from next year, according to new projections from IDC.

The BPO market in the Asia-Pacific region excluding Japan will grow at a five-year compound annual growth rate of 11.2 percent, from US$17 billion in 2008 to US$29 billion in 2013, IDC said Monday in a statement.

Emerging economies in the region are expected to undergo rapid growth during the forecast period, the market analyst group added. For example, the Indian market is predicted to achieve 17 percent growth between 2009 and 2010, due in part to a strong domestic demand especially from the telecoms sector and mainstream uptake of BPO services.

Suchitra Narayan, IDC's research manager for Asia-Pacific IT services research, noted that the current economic downturn is playing a part in the accelerated adoption of BPO, and in particular, platform BPO. Platform BPO typically refers to business processing services based on a vertical or horizontal technology platform.

With the global economic conditions pushing operating expenditure (Opex) to become the main focus for sustaining business direction, all non-core processes will be considered for outsourcing, said IDC. Organizations poised for an impending 2010 upturn are currently implementing significant business transformations, which includes seeking new BPO business models and services that will have a direct impact on bottom lines.

"The value-add brought by platform BPO such as standardization, scalability, economies of scale and pay-as-you-use functionalities are areas that fit well in the CFO's agenda in today's market," explained Narayan. "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."

Small and midsize businesses (SMBs), said Narayan, also stand to gain from platform BPO. It not only enables SMBs to outsource some of their non-core activities at a nominal fee classified under Opex, but allows them to scale such activities according to business growth.

Singapore-based Narayan added that as part of the BPO evolution, client engagements with vendors are moving away from traditional contractual arrangements to more intimate partner-relationships.

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