IDC: BPO poised for further growth in Asia

Business process outsourcing is forecast to increase at a 15 percent compound annual growth rate in the next four years, despite confusion about the definition of BPO.

The business process outsourcing (BPO) market in the Asia-Pacific region, excluding Japan, is forecasted to enjoy a compound annual growth rate of 15 percent from 2005 to 2009, according to IDC.

In its first study on BPO services in the region, the market researcher predicts that the market will generate revenues of US$12 billion by 2009, up from US$5.4 billion in 2004.

Conrad Chang, IDC’s senior market analyst for IDC’s Asia-Pacific BPO services, noted in a media statement, that the growth will occur despite challenges presented by the varying stages of maturity of the different Asian markets.

Matured services markets such as Australia and New Zealand have taken to BPO services rather early, with Korea, Singapore and Hong Kong following closely behind, according to IDC. Other semi-mature services markets, the analyst added, do realize the cost efficiencies that can be derived from BPO services but are hesitant because of services continuity concerns as well as risk mitigation.

"So to succeed in the region, BPO service providers need to be able to clearly articulate the value proposition that is best-suited to each varied market," said Chang.

However, IDC has found that both vendors and their customers are confused about what BPO really means, loosely labeling any sort of outsourcing activity as BPO. In addition, many BPO service providers use the terms BPO and processing services interchangeably when there are actually key distinctions, according to IDC. BPO services enable the client’s operational aspects of the business function to be better aligned with the overall business needs, while process services transfers management and execution of activities or single business processes to an external provider.