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BPO Sector defies financial crunch

Date: 2009-12-09Back to news page

Source: www.businessdailyafrica.com

The global business process outsourcing (BPO) has been one of the few sectors that have defied the financial crunch to record growth that is expected to rise further in coming years.

Last year, the global market for BPO stood at about $36 billion, a 28 per cent increase from the previous year’s $28 billion.

The United Nations Conference on Trade and Development (UNCTAD), in its latest ICT report, Information Economy Report 2009, says that the global financial crisis has added impetus to the need for organisations to outsource.

The trade body says that “as the recession adds pressure on companies across industries to reduce production costs, some will choose to source more services, and new services, from lower cost locations.

In the longer term, and as the global economy recovers, both the volume and scope of offshoring are likely to grow significantly.”

As reported by UNCTAD, renegotiation of BPO contracts is a trend that is catching on globally.

Analysts say that there exists a huge gap in higher level outsourcing services like financial analysis, data mining, engineering, research and development, insurance claims processing, architectural design, remote education and publishing, medical diagnostics, and journalism.

More industries appear to be warming up to the idea of outsourcing their services.

According to UNCTAD, latecomers in Africa and elsewhere should “improve their locational advantages and identify the niches in which they can compete most effectively.

Key issues to address include the costs and quality of broadband connections, the availability of human resources in the areas targeted and the effective promotion of existing opportunities to potential investors.

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