BPO deals outsmart IT in value growth, says TPI

While organizations' IT outsourcing budgets seems to be shrinking, BPO appetite is going high. The lure for more effective business processes and the adoption of new technologies in business, like cloud computing, analytics, process automation and social media platforms is adding to a lot of interest in BPO.

The TPI index for 2012 states that the value of IT outsourcing deals in Europe was the lowest in the last five years, while contract value for BPO in the region was up significantly on account of several large deals. According to the report TPI EMEA Index 2012, BPO value in Europe has climbed up 35 percent as compared to last year, while IT outsourcing contract value has gone down 48 percent.

Technology changes and domain expertize will be key factors driving BPO this year. Talking about the major outsourcing trends in 2013, Shantanu Ghosh, Senior Vice President, Practices, Solutions and Transitions, Genpact, asserted, "Technology and platform-based BPO will be one of the biggest trends this year." Demand for domain expertize across verticals and the use of standardized packages will keep BPO demand ticking.

Some of the large BPO deals were seen in the financial services sector. The banking services industry in Europe is expected to hold a lot of potential with some major structural reforms happening in the region. In a related interaction, Michael Crowley, Senior Economist, Economic Research Unit, Bank of Ireland, pointed out, "outsourcing will grow in the banking and financial sector in Europe. Market leaders will set the standard as they outsource more activities. However, customers are looking for outsource partners to base their operations in Europe." The challenge and opportunity for service providers will be in demonstrating a partnership and co-sourcing approach.