European Business Process Outsourcing (BPO) Forecast and Analysis, 2001-2006

Acceleration of BPO Activity in Europe

In comparison to the strongly publicized IT outsourcing market, the broader, but generally less documented BPO market in Western Europe is a giant market with both mature and emerging market segments. IDC not only identifies a current acceleration of BPO activity in the region, triggered by strong economic pressures, but also projects a structural growth of BPO spending. Both public and private organizations increasingly focus on core competencies and seek the help of a growing group of specialist BPO service providers to manage non-core functions for them by leveraging new technology and the Internet.

In order to fully understand what BPO means, it is necessary to first look at the overall business services landscape, and how BPO fits in to this. There are a number of different ways in which organizations can involve external specialists for business services. These different ways, that IDC refers to as "engagement types" include:

BPO services involve outsourcing business processes or functional areas (such as logistics or human resources), with performance metrics tied to the strategic business value of services provided and to customer satisfaction. Business value is recognized through results such as increased productivity, new business opportunities, new revenue generation, cost reduction, business transformation, and the improvement of shareholders' value. This is different from IS outsourcing and processing services, for which primary metrics are tied to accuracy, timeliness, and performance of the information systems.

Evolution of Corporate Sourcing Strategies