BPO Overtakes IT Outsourcing In US

Houston | Updated: May 14 2004, 05:30am hrs
The value of global business process outsourcing (BPO) contract awards in the first quarter of 2004 has reached $6.9 billion and the value of BPO contracts in North America has overtaken the value of new IT outsourcing contracts in the first quarter of this year.

According to BPO market research firm NelsonHall, BPO continues to develop more strongly in North America, (68 per cent of awarded contract value in Q1 2004), followed by Europe with 26 per cent, and then with Asia making an increasing contribution of 5 per cent in Q1, 2004. Owing to some fall in the adoption rate of BPO by the government sector, middle-office BPO contract awards in Q1 2004 were dominated by the financial services and telecommunications sectors which equals to 70 per cent BPO contract value. The insurance industry in Q1 2004 came in at 18 per cent of total contract value, up 1 per cent from the same quarter in 2003. The banking industry made a significant jump, up from 2 per cent to 12 per cent. Contrary to earlier trends, backoffice BPO contract awards in Q1 2004 were dominated by finance and accounting (F&A) services, rather than HR services.

NelsonHall believes the larger growth in F&A outsourcing is due to major organisations beginning to selectively outsource elements of their F&A processes.

According to the firm, the first three leading vendors in winning new BPO contract value globally during this period were IBM Global Services, Capita, and ACS.