Asia/Pacific BPO Industry to Reach $9.5 Billion in 2016: Gartner

The Asia/Pacific (excluding Japan) business process outsourcing (BPO) market is forecast to reach $9.5 billion in 2016, up from $5.9 billion in 2011, according to Gartner, Inc..

In 2012, BPO in Asia/Pacific is on pace to total $6.45 billion.

The fastest-growing BPO markets within Asia/Pacific will continue to be led by China and India. By vertical industry, banking and financial services, communications, government (both local and federal), technology, retail, and travel and transportation continue to be the largest consumers of BPO services in the region.

Asia/Pacific continues to present service providers with lucrative high-growth and profitable markets that are still relatively underdeveloped and untapped. Even during these trying economic times - the U.S. and European economic malaise - buyers in Asia/Pacific are still grappling with issues such as revenue growth, market share gains, scalability, quality of service and better cost management. Some negative impacts may surface as BPO grows across the region, including higher wage inflation and attrition, as demand for talent in the domestic market competes with offshore demand from the U.S. and Europe.

"The Asia/Pacific BPO market is still relatively underdeveloped and underexploited (with the exception of Australia and New Zealand) when compared with other markets or regions," said T.J. Singh, research director at Gartner.

"This presents opportunities to BPO service providers that are willing to invest in the region. Key drivers for BPO buyers in Asia/Pacific are scalability, quality, best-of-breed process and technology infusion, and improved service levels. Cost continues to be a consideration in all deals. Asia/Pacific is an immature market for BPO services. No one provider dominates every type of BPO service, and very few BPO providers can successfully demonstrate true regional or Pan- Asia/Pacific BPO capabilities for multiple processes," said T.J. Singh, research director at Gartner.

The largest BPO market in Asia/Pacific in 2011 was Australia, with a market size of more than $4.63 billion, over 3.5 times larger than India ($1.26 billion), the second-largest consumer of BPO services.

"The BPO service market in Asia/Pacific (excluding Japan) consists of a wide range of local, regional and multinational (including India-based) service providers. Although the market is dominated by global and India-based service providers, there are also a number of fast-growing regional and niche BPO service providers, "said Mr. Singh.

Gartner analysts will examine key issues affecting the Indian IT industry at Gartner Symposium/ITxpo.