Gartner: BPO in Asia/Pacific to Reach $9.5 Billion By 2016

STAFF REPORT

Market analyst firm Gartner predicts that the business process outsourcing (BPO) industry in Asia Pacific (excluding Japan) region will reach $9.5 billion in 2016, up from $5.9 billion in 2011.

In the current year, Gartner says, BPO in Asia/Pacific is on pace to generate a revenue of $6.45 billion.

Given the research firm’s statement, the BPO market in Asia Pacific is still relatively underdeveloped and underexploited when compared with other markets. Therefore, it presents greater opportunities to BPO service providers willing to invest in the region.

“Key drivers for BPO buyers in Asia/Pacific are scalability, quality, best-of-breed process and technology infusion, and improved service levels. Cost continues to be a consideration in all deals,” said T.J. Singh, research director at Gartner. “Asia/Pacific is an immature market for BPO services. No one provider dominates every type of BPO service, and very few BPO providers can successfully demonstrate true regional or Pan- Asia/Pacific BPO capabilities for multiple processes.”

The largest BPO market in Asia/Pacific in 2011 was Australia, with a market size of more than $4.63 billion, over 3.5 times larger than India ($1.26 billion), the second-largest consumer of BPO services.

However, Gartner says, the fastest-growing BPO markets within Asia/Pacific will continue to be led by China and India. Banking and financial services, communications, government (both local and federal), technology, retail, and travel and transportation continue to be the largest consumers of BPO services in the region.

Even during these trying economic times — the U.S. and European economic malaise — buyers in Asia/Pacific are still grappling with issues such as revenue growth, market share gains, scalability, quality of service and better cost management.

Growth in the BPO industry, according to Gartner, is likely to cause wage inflation and attrition in local labor market, as demand for talent in the domestic market competes with offshore demand from the U.S. and Europe.

Here the BPO market consists of four segments: customer management ((sales, marketing and customer care) enterprise services (HR, finance and accounting, operations and payment services), vertical services (mortgage services and credit card services for the banking sector, claims processing for insurance, and billing services for telecommunications) and supply management services (logistics, procurement and warehousing).

“Although the market is dominated by global and India-based service providers, there are also a number of fast-growing regional and niche BPO service providers,” Singh added.