The State of Business Process Outsourcing

IDC has been examining the state of business process outsourcing and recently published a report on the topic. Here are some highlights:

• Small and midsize deals are fueling growth. Underlying this trend is an increase in the share of new deals vs. extensions and renewals, which indicates that a growing number of new organizations are buying into the business outsourcing model.
• While horizontal business processes continued to dominate deal activity, 2005 also saw an increase in the number of vertical-industry specific deals, particularly in the financial services and government verticals.
• Manufacturing, financial services, and government verticals registered the strongest adoption of business outsourcing overall.
• Human resources had a strong year in 2005, registering double-digit growth in deal activity and deal value.
• Business outsourcing deals continued to have a local flavor with single-country scoped deals dominating the deal mix.

According to Romala Ravi, director of IDC’s BPO Services research, "The majority of this market, comprising deals under $1 billion in value, continued to see vibrant activity with adoption spread out across a wide range of company sizes, industries, and geographies."

How did IDC derive its data? The same way you and I can -- by published reports about deals, access to publicly available financial data, and press releases from the service providers that get the work. The secret sauce for them is putting the information into a databank and then tapping into it to see what pours out.

If you really, really want to read more, consider buying the $4,500 report:

Trends in BPO Deal Activity: 2005 Versus 2004 (Preliminary Results)

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