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Upsurge in ITO Spending and BPO Trends

by: Karen Cayamanda

Tuesday, November 15, 2011 |

ITO and BPO Spending

The TPI Momentum 2011 Market Trends & Insights Service Line Report (tpi.net) has just been released and it includes observable trends across eight outsourcing disciplines. The customer markets of ITO and BPO services are all looking out for the best technologies available - some examples are mobile device support and Cloud Computing. Clients also demand better forms of customization from providers in terms of functionality and features.

Rapid IT developments and changes in the field do not cause resistance but these even fuel the growth of the market. A record on closed contracts in the BPO industry is at record high in 2010, directly correlated to expenditures in ITO and network solutions.

Here are some of the highlights from the report:

  • Business Process Outsourcing (BPO) is gaining support in new client markets. A total of 759 BPO contracts were closed in 2010. This poses a 20-percent increase from records in the previous year. Most of these deals are inclined towards disciplines such as Contact Center, Finance and Accounting, Human Resources, and Procurement. Majority of the contracts are with small companies exploring outsourcing, and are not necessarily large in volume. Consequently, total spending decreased by 12% from 2009. 
  • Evaluating strategies slow ITO. The ITO market had to take a stop and wait as clients evaluated their IT strategies. This resulted to a decline in contract volumes because clients involved themselves with exploring options and setting guidelines for new technologies, like with mobile devices, applications, information security, Cloud Computing, etc. Contracts in ITO increased by 1.6 percent in the US, and faced a decline in EMEA and Asia. The Managed Network Services service line experienced greatest demand mainly due to telco-to-telco needs. 
  • Clients are bundling up. Clients opted to utilize more bundled contracts, as opposed to standalone, in 2010. Especially with Cloud Computing and finance and accounting, clients build portfolios or separate bundles of outsourcing contracts that consider business and technology perspectives. Portfolio bundling and developing a niche expertise led to multi-provider sourcing.
  • Mobility is moving the market. The business need for mobility is setting direction in the field of outsourcing. This demand has the greatest effect to the End-User Computing service line because providers need to expand solutions to respond to the growing number of mobile devices. Providers now are asked to create mobile applications, manage network traffic, and allow mobile access to business applications. 
  • Expert help wanted. Clients seek providers with expertise in their particular field. They would rather outsource to companies who can offer customized solutions for a particular industry or business process, instead of generic services. Cost-effective and innovative solutions are also a selling point, like Cloud Computing services that both result to cost savings and greater efficiency. Lastly, there is observed inclination to “business-process-as-a-service” solutions where entire functions like payroll and recruitment are outsourced on a project basis.

The entire TPI Momentum report dedicates one chapter for each service line that tackles their respective trends and developments in greater detail.

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