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Wed 12 May 2004 04:00 AM

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BPO market spend soars

Worldwide spending on business process outsourcing (BPO) services totaled approximately US $405 billion in 2003, according to IDC.

Worldwide spending on business process outsourcing (BPO) services totaled approximately US $405 billion in 2003, according to IDC. This represents an increase of 8.1 % over 2002. The main reason for global BPO market growth is that an increasing number of businesses are reviewing their internal operations to enable them to recognise and concentrate on their core businesses.

“Outsourcing is a challenge, but it is more of a challenge to be competitive, flexible, and innovative while delivering all functions internally. The successful company embraces outsourcing with determination,” advises Dr. Richard Sykes of Morgan Chambers, UK-based world leaders of outsource.

This trend for BPO is just beginning to be realised in the Middle East, as some local users begin to outsource basic functions. For example, Abu Dhabi Islamic Bank (ADIB) has outsourced its IT helpdesk requirements. IDC predicts that BPO, which comprises human resources, procurement, finance & accounting, customer care, logistics, engineering/R&D, sales & marketing, facilities operations & management, and training, will increase to $682.5 billion in 2008, with a compound annual growth rate (CAGR) of 11%.

This research points to a BPO market that is filled with opportunities. However it is not without its pitfalls. For service providers looking to embrace BPO, IDC believes it is vital to examine each function independently, analyse its characteristics, match the buyer needs and expectations within each function with their own capabilities, and make strategic decisions on where to focus.

The same principle of meticulous planning also applies to the end-user: "Outsourcing can enable business to move faster, become more efficient, or sometimes reduce support costs, but vendor choice and contract structures must be carefully calculated and negotiated," says Dean Davison, vice president with Meta Group's service management strategies service.

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