Why, What, How, and Who of BPO is Changing – And for the Better! | Sherpas in Blue Shirts

Originally posted on Global Services Media

How the BPO industry is evolving and what industry stakeholders can expect in 2014 and beyond?

The turn of the century witnessed an explosive growth in Business Process Outsourcing (BPO) as a powerful arbitrage-led value proposition took center-stage.

Today, arbitrage is table stakes and clients are expecting more. The BPO service provider landscape has also undergone a metamorphosis. Competitive intensity is at an all-time high, constantly pushing providers to innovate and create differentiated BPO solutions.

This demand-supply push and pull has brought the BPO industry to an interesting inflexion point. In this article, we describe how the BPO industry is evolving and what industry stakeholders can expect in 2014 and beyond (see exhibit below).

1. Why BPO? Driving Cost+ impact
In a recent Everest Group survey, three-quarters of enterprise respondents said their outsourcing and/or shared services initiatives met financial objectives.

Surprisingly, almost 90% reported that they now include sources of value other than cost in their business cases. A cost+ value proposition for BPO is emerging that lays greater focus on driving organizational agility, business impact, and topline-growth beyond cost reduction and greater efficiency. As a result the definition of BPO, the underlying solutions, and the service provider landscape are also evolving

2. What is BPO? Holistic definition and scope
BPO is not one market – it is an amalgamation of several horizontal (such as F&A, HR, procurement) and industry-specific (such as mortgage servicing, insurance claims processing, fund administration, clinical trials) market segments. Each BPO segment has unique characteristics in terms of value creation, solution characteristics, and service provider landscape. A cookie-cutter approach to BPO no longer works.

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