Customer care now dominates the BPO market

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By: Wise Marketer Staff |

Posted on April 13, 2005

In a recent study, IDC explored contract activity in the fast-evolving BPO (business process outsourcing) market, and found that the manufacturing, government, and retail industries dominated activity in the US during 2004, with the customer care segment driving the greatest contract activity relative to other functions (such as human resources, finance, and accounting).

Spending on customer care services was distributed across a wide variety of industries, including communications and media, financial services, manufacturing, government, retail, and services.

Much from the few
IDC found that a handful of industries drove the lion's share of BPO contract activity in the United States during 2004, and believes the additional vertical industries poised for further BPO adoption in 2005 include utilities & energy, financial services, and communications & media.

"Responding to mounting pressures around cost reduction and greater operational flexibility, companies in the manufacturing, government, and retail sectors led the adoption of the BPO engagement model, accounting for close to 60% of all US deals announced over the past year," said Shruti Yadav, research analyst for BPO services at IDC. IDC expects these drivers, in combination with other BPO goals such as technology access and regulatory compliance, to drive further growth in many key vertical markets.

Adoption stages
"Each vertical is at a different stage of BPO adoption, creating the need for vendors to quickly adapt their client pursuit approaches to the BPO adoption maturity of different industries," concluded Yadav. "The most successful BPO providers will be those that can effectively articulate an understanding of vertical-specific business climates, regulatory environments, and competitive landscapes, and then propose offerings that directly address those customer dynamics."

The study, '2004 BPO Contracts for Key Vertical Horizontal Functions: A US Market Analysis By Vertical Industry', provides an overview and analysis of the major BPO contracts announced in 2004 in the US market for the four key horizontal functions of customer care, human resources, finance and accounting, and procurement. Also presented in the report is the vertical distribution of these contracts and an investigation of BPO adoption trends and the drivers characterising different industries.

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