Gartner Says Offshore BPO Industry to Grow 65 Percent in 2004
Analysts Discuss Key Trends in Offshore BPO During Gartner Outsourcing Summit 2004
LAS VEGAS, NV. May 18, 2004 — Offshore business process outsourcing (BPO) is expected to reach $3 billion in 2004, a 65 percent increase from 2003 total of $1.3 billion, according to Gartner. In 2004, offshore BPO is expected to represent 2.3 percent of the total BPO market.
Gartner presented these findings today during Gartner Outsourcing Summit 2004, which is taking place here, through May 19. While offshore BPO has experienced high growth rates the past few years, and the market is accelerating in 2004, the industry will not sustain such high revenue increases in the future.
"Offshore BPO is an emerging, but immature, opportunity," said Robert H. Brown, principal analyst for Gartner's sourcing group. "There will be slower adoption of offshore BPO through 2007. As the service delivery matures, and as users and service providers overcome various operational, cultural and sociopolitical issues, growth will resume toward the end of the decade and will synchronize more with overall BPO growth."
BPO is the delegation of one or more IT intensive business processes to an external service provider (ESP) that, in turn, owns, administers and manages the selected processes, based on defined and measurable performance metrics. Examples of business processes that are outsourced to an ESP include logistics, procurement, HR, finance and accounting, CRM, or other administrative or customer-facing business functions.
Offshore BPO is the delegation of one or more IT intensive business processes to an ESP from a country that is geographically remote from the client enterprises. The ESP owns, administers and manages the selected processes, based on defined and measurable performance metrics.
A 2003 Gartner survey of 301 U.S. clients of BPO showed that 16 percent of those companies were currently outsourcing BPO services offshore, and that 17 percent were considering outsourcing processes offshore within the next two years.
Gartner analysts said that the vast majority of offshore BPO is around contact centers, including voice, e-mail and chat, and the remainder for back-office transaction processing services. However, organizations must not neglect to map the entire customer process, particularly the intersection between the parts that are outsourced and the functions that are retained.
"The recommended plan for a successful outsourcing relationship is careful planning, integration, and management of outsourced channels, functions or processes, where they remain part of the enterpriswide strategy for customer service," Brown said. "To build successful service delivery, clients and outsourcers must understand the entire process and clearly articulate who is responsible for which piece to ensure that nothing falls through the cracks."
Gartner Outsourcing Summit 2004 is the most comprehensive conference ever organized for buyers and users of outsourcing services. The emphasis is on sharing strategies that ensure tangible, sustainable results in a business environment where half of all outsourcing arrangements do not deliver on their expected benefit. Additional information about the conference is available at www.gartner.com/us/itsourcing
About Gartner:
Gartner, Inc. (NYSE: IT and ITB) is the leading provider of research and analysis on the global information technology industry. Gartner serves more than 10,000 clients, including chief information officers and other senior IT executives in corporations and government agencies, as well as technology companies and the investment community. The Company focuses on delivering objective, in-depth analysis and actionable advice to enable clients to make more informed business and technology decisions. The Company's businesses consist of Gartner Intelligence, research and events for IT professionals; Gartner Executive Programs, membership programs and peer networking services; and Gartner Consulting, customized engagements with a specific emphasis on outsourcing and IT management. Founded in 1979, Gartner is headquartered in Stamford, Connecticut, and has more than 3,500 associates, including approximately 1,000 research analysts and consultants, in more than 75 locations worldwide For more information,
visit www.gartner.com.
