Weak US demand is dragging down BPO market growth

The growth of the global business process outsourcing (BPO) market is set to decelerate over the next year, from 6.3% in 2011 to 5% in 2012, according to a report from Gartner.

Gartner found that the US market is dragging down the pace of growth in the industry. It estimates that spending by North American companies on BPO services will only grow 3.8% in 2011.

That contrasts with the Asia / Pacific region, where Gartner predicts 17.9% growth for this year. That growth will primarily take place in India, China and Australia – Japan’s BPO market was predicted to shrink by almost 1% due to the impacts of the earthquake this year.

Gartner analyst Cathy Tornbohm said that BPO spending in emerging economies is currently growing faster than in large, developed economies.

"While growth remains strong in developing economies, the United States, the world’s largest BPO market, presents a mixed picture," she said. "Emerging markets are faring far better and, generally, multinational companies continue to look to BPO as a means both to reduce costs and to buoy their business operations [during a return to growth]."

The Western European BPO market fell in between the US and Asia, and is set to grow by 8.9% in 2011. Gartner singled out legal process outsourcing as an area that is likely to grow particularly quickly in the UK market.

However, it was noted that mainland Europe’s mix of cultures and languages may be holding the BPO market back. "In continental Europe, the challenges of overcoming language requirements, labor laws and trade unions, and a lack of labor arbitrage benefits, still limit adoption of many types of BPO," the report said.

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Ben Rossi

Ben was Vitesse Media's editorial director, leading content creation and editorial strategy across all Vitesse products, including its market-leading B2B and consumer magazines, websites, research and...

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