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

Business process outsourcing as a business concept is not new. The use of external specialists in areas such as finance, accounting, logistics and IT goes back a long time. What is new is the scope, adoption speed and business impact of BPO in Western Europe, which includes the following factors:

In Europe, we are at the beginning of the unfolding of vertically integrated public and private organizations into more specialized companies that go to market and add value as part of a larger network of collaborating organizations. Also, competition in the BPO market is just starting to shape up, with various types of players entering the market with new and often innovative offerings.

BPO Growth Outlook

The overall outlook for growth in the European BPO market is healthy as BPO adoption in the region is far from mature, but there are significant differences by corporate function, country and industry.

Based on a comprehensive demand and supply-side model, IDC estimates that in 2001, $132.5 billion was spent on BPO services in Western Europe in the 10 functional areas covered in this study. This makes Western Europe the second largest regional BPO market in the world after the United States, which had an estimated total spend of $417.5 billion in 2001. European BPO spending is projected to grow at a CAGR of 11.8% to $231 billion in 2006, the major assumption being that the management of a company's business functions will continue to migrate from internal to external service providers as organizations in Europe will focus more on core competencies.