I frequently use the term BPO when talking about the Business Process Outsourcing industry and a lot of times get strange, inquisitive looks. People ask all the time, what is BPO? Or say, I have never heard of business process outsourcing before. The Business Process Outsourcing, or BPO, industry is not a common name, yet it is rapidly emerging as a global industry that will soon have an impact on businesses across the world. So what is it and how will could it affect you?
What is Business Process Outsourcing?
Business process outsourcing is defined as a method of sub-contracting various business processes to a third-party vendor. These third party vendors are most commonly referred to as BPOs and likely have a large employee base in locations like the Philippines, India, Latin America, or Eastern Europe. Most of the largest companies in the world use BPOs to outsource business process and increase efficiency and reduce cost structure. Companies like Microsoft, Amazon, Comcast, Facebook, Uber, and Doordash have relied on BPO partners to not only accelerate the growth of their organizations, but also accelerate the growth of the business process outsourcing industry.
The current size of the business process outsourcing market, according to Global News Wire, is approximately $161bn. It is projected to continue to grow between now and 2027 at a combined annual growth rate (CAGR) of 5.2%. That means, by 2027 the size of the global business process outsourcing market will be close to $230bn. So what is driving this change and the emergence of the business process outsourcing industry?
Drivers of Growth
- Adoption of BPO in Technology and Telecom: BPO is a perfect way for rapidly growing technology companies to scale without risking large amounts of capital on staffing costs. We are consistently seeing startup companies partner with BPO to build huge teams of engineers, customer service agents, or back office professionals to support their high growth businesses. In Telecom, BPO has been previously adopted by major players like Comcast and T-Mobile but is now becoming more attractive to smaller, regional provider as well.
- Remote Work Mindset Shift: Executive level leadership is beginning to realize that work can be done remotely, all over the world. Work doesn’t necessarily need to be done in the office which is opening up companies, who may have never considered an overseas supporting workforce, to the BPO concept.
- Emergence of New Technologies: Artificial Intelligence and Robot Process Automation are becoming more sophisticated by the day. These tools are slowly reducing the need for humans to perform simple tasks such as data entry, customer service, and more. These tools are also allowing BPO companies to focus their efforts on higher level, more specialized functions. BPOs are now helping businesses outsource functions like engineering, project management, network administration, clinical support, and more. A lot of BPOs are also building capability to provide both artificial intelligence and robot process automation as a service to their clients to bolster what they can provide.
Next Steps for Business Process Outsourcing
Business process outsourcing is an emerging industry that can positively impact businesses across the United States and the world. Especially considering the talent crisis we currently face, BPOs are a great way for businesses to solve staffing challenges, reduce cost structure, and improve productivity in their business. For more information on how business process outsourcing can positively impact your business, check out our insights here. If you want to look for a BPO vendor, we have plenty of resources available to help you evaluate and decide which is right for you.
Explore the emerging BPO hubs in the Philippines. Visit our blog to learn about the top business process outsourcing companies in Baguio, enriching your understanding of this rapidly growing industry.
Connext provides fully customized outsourcing solutions for organizations looking to innovate and grow. Work with Connext Global Solutions today.
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