BUSINESS INSIGHTS The BPO Market Outlook Changing competitive dynamics by Buick



The BPO Market Outlook
Changing competitive dynamics, key players and best practices

 Published August 2006
 New Technology Management Report

                 BPO market sizing ($m), 2004-2008

 Source: The BPO Market Outlook

 • Identify lucrative areas of investment

 • Assess and develop your competitive strategy

 • Strengthen your market position
The BPO Market Outlook
Changing competitive dynamics, key players and best practices

                  The three underlying                        Business Process Outsourcing (BPO) is the fastest growing segment of
               value propositions of BPO                      IT outsourcing, as organizations see the opportunity it offers to
                                                              outsource business processes with the following benefits: the ability to
                                                              focus on core competencies; cost savings; improved business process
                                                              quality; flexibility in terms of technology; and reduced time to market.

                                                              The BPO Market Outlook is a new management report that provides
                                                              an introduction to horizontal BPO – such as CRM, human resources,
                                                              finance and accounting, and procurement – profiling the major players,
                                                              analysing market trends and outlining best practices to provide
 Source: The BPO Market Outlook                               organizations with a platform for making the right BPO decisions.

 “Increasingly competitive environment and pressure to
    improve operational efficiency in recent years has        This new report will enable you to assess the BPO market and
     forced companies to focus on areas that deliver          develop specific competitive strategies to increase efficiency and
       competitive differentiation. As a result, these        productivity whilst reducing costs.
   companies are looking for opportunities to pass on
 responsibility for supporting or administrative functions
   that are not considered strategic to the business...“

Some key findings from this report...

              Indian BPO revenues and                        • The market for F&A BPO is set to grow from $13.9 billion in 2005, to
                headcount, 2004-2006                           over $18.5 billion in 2008, at a CAGR of 10%.

                                                             • BPO can lead to savings of up to 30%, which can increase to 50% if
                                                               the outsourced work is offshored.

                                                             • The BPO market is the single fastest growing area of the IT services
                                                               sector. Growing 8% annually, spending on BPO services is expected
                                                               to grow from $112.1 billion in 2005 to $144 billion in 2008, an
                                                               increase of 40%.

                                                             • F&A BPO is mainly a labor arbitrage play, which means the barriers to
Source: The BPO Market Outlook
                                                               entry are lower and Indian offshore providers have been able to gain
                                                               a strong foothold in the market.
 “The Indian BPO market is estimated to have grown
  from $4.6bn in 2004 to $6.3bn in 2005, recording           • The HRO market is predicted to grow from just under $23 billion in
a growth of nearly 48 per cent – accounting for 27 per         2004 to over $30 billion in 2008, at a CAGR of 7%.
      cent of total software and services exports.
    Net employment in the Indian BPO segment is
                                                             • Procurement outsourcing (PO) is starting to gain market traction.
estimated to have grown by approximately 100,000 in
       2005, taking the total direct employment
      to 316,000. The BPO sector is predicted to             • India remains the largest provider of offshore BPO services,
          grow to more than $6bn in 2006...”                   accounting for nearly half of the global offshore BPO market.
                                                               However, China is expected to grow rapidly.
This new report will enable you to...

                                                                • Anticipate future risks by assessing the benefits and risks of
         Accenture’s customer contact                             outsourcing business processes, in terms of the type of process that
              value proposition
                                                                  should be outsourced, the capabilities of service providers and
                                                                  location of service provision analysed in this report.

                                                                • Develop successful competitive strategies, penetrate the market
                                                                  and increase market share using our best practice advice and
                                                                  recommendations for companies considering BPO and the forecast
                                                                  for market growth in each BPO sector.

                                                                • Make informed decisions by recognizing the market dynamics
                                                                  shaping the BPO market, and how that affects your BPO
 Source: The BPO Market Outlook                                   strategies through an analysis of the market trends, drivers and
                                                                  inhibitors that are influencing the BPO market and its horizontal
     “Accenture ensures that the change happens by                sub-sectors.
 managing relations with outsource providers on behalf
      of the client. Accenture operates as the prime            • Create a competitive advantage by understanding the vendor
   contractor on behalf of its clients in many instances,         competitive dynamics in each horizontal BPO function using the
     which means the outsource providers sign their               competitive analysis and profiles of the main vendors within this
     contracts for delivery of services with Accenture            report.
               rather than with the client. ....”

Key questions answered in this report

                                                                • Which are the fastest growing BPO sub-sectors, and why ?
    Top 10 fastest growing IT services
             providers, 2005
                                                                • Should outsourcing be based on financial or strategic considerations?
    Rank    Company                 Annual         Revenue
                                    revenue ($m)   growth (%)
    1       Atos Origin             6,851.0        75.0         • What are the real risks surrounding finance and accounting BPO?
    2       Cognizant Tech Solns    587.0          59.0
    3       Infosys Technologies    1,592.0        49.8
    4       Satyam Computer Svcs    794.0          40.3
    5       CGI Group               2,640.0        40.0         • Which business processes should be outsourced?
    6       Wipro Technologies      1,388.0        39.6
    7       Tata Consultancy Svcs   2,220.0        37.0
    8       SRA International       616.0          36.9
    9       CACI                    1,146.0        35.9         • How mature is each BPO sub-sector?
    10      WM-data MB              1,121.0        24.9

                                                                • When choosing a BPO provider, what are the most important factors
 Source: The BPO Market Outlook                                   to consider ?

                                                                • Which location to choose for offshore BPO?
“With BPO representing the single fastest growing area
     of the IT services sector, IT service providers,
management consultancies, and specialist BPO vendors            • What type of BPO contract is most suited to your organization?
 are all positioning themselves to gain a share of this
     lucrative market. The market itself is seeing a            • Why is recruitment outsourcing making waves in the BPO industry?
  convergence of traditional IT services and specialist
      business process management services....”                 • Which are the most established service providers in each BPO
Sample information from the report

 Chapter 7: Best practice BPO
 BPO benefits                                                           Market maturity model for BPO
 Outsourcing business processes can bring significant
 benefits to companies looking to cut costs and improve
 overall business performance. Because external
 providers focus on key processes as their core
 competency, companies are able to effectively leverage
 their knowledge and experience for their own benefit.
 The core benefits can be categorized into four separate

 • Lower costs. Because BPO providers focus purely on
   the processes that they provide, they are able to
   offer a lower cost to organizations than they might
   otherwise be able to get themselves. For many of
   the processes outsourced such as contact centers,         Source: The BPO Market Outlook
   the startup costs are significant, and or many are
   hard to justify given the alternative of a BPO service.
   Similarly, the BPO provider will often guarantee that it is using the most appropriate and up-to-date
   technology, allowing the user to avoid issues such as sourcing and upgrading.

 • Improve service. Because outsourcing contracts are constructed using SLAs (Service Level Agreements), a
   predefined level of service is guaranteed. In most situations, this level is higher than the company itself
   could provide internally. For applications such as customer interaction, this is critical as poor
   communication with customers can affect revenues. For other processes such as HR, the customer is able
   to receive better staff and ensure that existing staff are managed properly, thereby leading to better
   internal efficiencies.
 • Gain access to expert skills. As companies are faced with increasing regulation, the demand for
   appropriately skilled staff is growing. Often, it is difficult to ensure an adequate level of knowledge within
   internal staff to guarantee performance. Using a BPO provider for select processes, however, provides
   companies with staff that are experts in specific areas. This extra knowledge can help to relieve the
   pressure of issues such as regulation. Similarly, external experts can help optimize and streamline internal
   processes through the application of best practices methodology.
 • Focus on core activities. By outsourcing non-critical elements of the business, companies are able to pay
   more attention to their core competencies. In this way, companies can effectively forget about managing
   lines of business such as HR or finance and accounting. This releases considerable resources to try and
   gain as much market share and revenues as possible, while at the same time maintaining or improving the
   level of services within the business.

 BPO market segments
 Horizontal BPO services are, overall, further advanced in terms of market development than the more sector-
 specific vertical BPO services. However, a great deal of this development has happened in a service bureau
 or managed service set-up, often being more third-party service than outsourcing, with few strategic BPO
 deals having driven past market growth...

 Order this report today to find out more...
Table of Contents

 EXECUTIVE SUMMARY                                         - Agilsys
   • An introduction to business process outsourcing       - Atos Worldline
   • Customer relationship management BPO (CRM BPO)        - beCogent
   • Finance and accounting BPO (FAO)                      - Capita Group
   • Human resources BPO (HRO)                             - Convergys
   • Procurement BPO (PO)                                  - EDS
   • Offshore BPO                                          - IBM Global Services
   • BPO best practice                                     - ICICI OneSource
                                                           - Minacs Worldwide
 CHAPTER 1: AN INTRODUCTION TO BUSINESS                    - Perot Systems
   PROCESS OUTSOURCING                                     - Xansa
   • Summary                                             • Recommendations
   • Purpose of this report
   • Introduction to outsourcing                       CHAPTER 3: FINANCE AND ACCOUNTING BPO
   • Business process outsourcing                        • Summary
     - Benefits                                          • Introduction
     - Risks                                             • Market overview
   • Introduction to horizontal BPO                        - Market sizing
     - Customer relationship management (CRM) BPO          - Major contracts
     - Human resources BPO (HRO)                         • Competitive analysis
     - Finance and accounting BPO (FAO)                    - Accenture
     - Procurement BPO (PO)                                - Affiliated Computer Services
     - Offshore BPO                                        - Agilisys
   • Market dynamics                                       - Capgemini
   • Market sizing                                         - CGI Group
   • BPO market conclusions                                - Convergys
                                                           - EDS
 CHAPTER 2: CUSTOMER RELATIONSHIP                          - Genpact
   MANAGEMENT BPO                                          - HP Services
   • Summary                                               - IBM GS
   • Introduction to CRM BPO                               - Infosys
     - Drivers                                             - Tier Technologies
     - Inhibitors                                          - Vertex
   • Market dynamics                                       - Unisys
     - Market background                                   - WNS Global Services
     - Market sizing                                       - Xansa
     - Major contracts                                   • Recommendations and FAO best practice
   • Competitive dynamics                                  - Vendor selection (minimizing risk)
     - Accenture
     - Affiliated Computer Services (ACS)
Table of Contents (contd.)

 CHAPTER 4: HUMAN RESOURCES BPO                                • Market dynamics
   • Summary                                                   • Competitive analysis
   • Introduction to HRO                                         - Accenture
   • Market overview                                             - Ariba
    - Hot topics                                                 - IBM GS
      — Capacity and pricing                                     - ICG Commerce
      — Rise of multi-service deals, and offshore delivery     • Recommendations and PO best practice
      — Mid-market moves
      — M&A not as expected                                  CHAPTER 6: OFFSHORE BPO
      — Rise of recruitment BPO (RPO)                          • Summary
    - Market dynamics                                          • Introduction Offshore BPO
    - Market sizing                                            • Market context
    - Major contracts                                            - Indian services providers
   • Competitive dynamics                                      • Competitive analysis
    - Accenture HR Services                                      - Accenture
    - Affiliated Computer Services (ACS)                         - Cognizant Technology Solutions
    - ADP (Employer Services)                                    - EDS (Mphasis)
    - Capita Group                                               - Genpact
    - Capgemini                                                  - HCL Technologies
    - Ceridian Corp                                              - ICICI One Source
    - Convergys                                                  - IBM (Daksh)
    - EDS (ExcellerateHRO)                                       - Infosys Technologies
    - Fujitsu Services                                           - Tata Consultancy Services
    - Hewitt Associates                                          - Transworks Information Services
    - HP Services                                                - Wipro Technologies
    - IBM GS                                                     - WNS Global Services
    - SAP                                                        - Xansa
    - Other                                                    • Recommendations and offshore BPO best practice
   • Recommendations and HRO best practice                       - Vendor selection
    - Change management                                           — Pick the Country First
    - When is HRO right for the organization?                     — Recommendation
    - Overcoming reluctance to outsource                          — Domain & Technical Filtering
                                                                 - Preparation and execution
 CHAPTER 5: PROCUREMENT BPO                                       — Engagement issues
   • Summary
   • Introduction to Procurement BPO
    - Benefits
Table of Contents (contd.)

 CHAPTER 7: BEST PRACTICE BPO                           • Largest BPO contracts in last 12 months
    • Summary                                             (to 30 June 2006)
    • Introduction                                      • BPO market sizing ($m), 2004-2008
    • The three basic value propositions of BPO         • Customer care BPO market sizing ($m), 2004-2008
      - Cost reduction                                  • Major CRM BPO contracts in last 12 months
      - Core competency                                   (to 30 June 2006)
      - Transformation                                  • Finance & accounting BPO market sizing ($m),
    • Key business and technological issues in BPO        2004-2008
      - Transformation: who, how and when?              • Major FAO contracts in the last 12 months
       — How does application infrastructure need to      (to 30 June 2006)
           evolve to enable BPO?                        • Major contracts in the development of HRO, 1999-2005
      - The vertical credibility challenge              • HRO market sizing ($m), 2004-2008
    • The BPO maturity model                            • Major HRO contracts, 2005-2006 (to 30 June 2006)
      - Pre-BPO                                         • Key contracts in procurement BPO
      - Lift-out stage                                  • Top 10 services providers by profit margin, 2005
      - Shared services stage
      - Utility stage
    • BPO contracts
    • BPO benefits
    • BPO market segments
    • Glossary
    • Index

 • BPO market sizing ($m), 2004-2008
 • Accenture’s customer contact value proposition
 • Finance and accounting outsourcing
 • Procurement outsourcing
 • Indian BPO revenues and headcount, 2004-2006
 • Horizontal BPO in India in 2005
 • Accenture global delivery network, 2005
 • The three underlying value propositions of BPO
 • Market maturity model for BPO

 • Top 10 fastest growing IT services providers, 2005
 • Top 10 services providers by profit margin, 2005
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