The Continuing IT/business process outsourcing renaissance

After a year of Covid-induced spending cutbacks, global demand for IT and business process outsourcing (BPO) has surged in the first two quarters of 2021.

The first three months of this year saw over $17bn spent on outsourced IT/business processes contracts, up 11% from the same time last year.

The uncertainty of the last year resulted in industry-agnostic cutbacks and spending uncertainty, leading many companies to cut back on “unnecessary” contracts and less likely to take on new systems.

Pandemic Programming

While the outsourced IT sector initially saw a dip in value of 5% at the beginning of the pandemic, companies soon realised the need to deliver a sustainable and technology-based solution to combat the various pandemic restrictions that came in the way of “business as normal” – a trend we’ve seen repeated across our client base in the business services sector.

The idea of so-called “digital transformation” is a vague one at best, and likely means different things to different businesses. The general idea is that companies should be looking to utilise technology in all areas of their business in order to better operate and serve their customers.

According to estimates from Twilio, the effects of stay-at-home orders and other lockdown restrictions have accelerated digital transformation by some six years. This can be illustrated by the huge surge in demand for SaaS businesses that offer digital solutions for the Covid age, such as DocuSign. Companies that offer cheap and reliable outsourcing solutions are quickly finding themselves becoming fully integrated into their clients’ tech stacks.

The Industry Now

Back in 2010, many were heralding the end of the age of outsourcing “as we know it”, writing that the world was likely to see a phasing out of clunkier, traditional outsourcing in favour of more standardised, per-use models. 

These predictions turned out to be pretty on the money. Rather than think of outsourced solutions as entirely external and disparate things, I would wager than many companies now view them simply as another tool in the arsenal of their business.

A lot of the IT services/business process outsourcing companies that find themselves fully integrating with their clients are the ones that manage to do so seamlessly. They manage to be both specialised in their field (in only the way that a dedicated system could be), while also remaining an intuitive part of business operations, requiring little-to-no break in the work flow. 

The Future of Outsourcing

The future of the BPO market continues to look bright as we move into the second half of the year. In the UK – if Covid cases continue to remain low – many business are beginning to return to normal and even think about growth in a post-Covid world. 

B2B research firm, Clutch, writes that 80% of small business plan to outsource this year to drive growth as efficiently as possible. As many small business owners will know, trying to do everything yourself ends up slowing down the growth of the business, as time gets sapped away from the main mission. 

For smaller companies, today’s outsourced solutions provide afford a level of expert knowledge/execution for a fraction of the cost. Further to this, disruptive services like Fiverr are reviving the idea of outsourced labour for the gig-economy age. 

To top it all off, the BPO industry is predicted to reach a global value of some $230.3 billion by 2027, with a CAGR of 5.2% over the analysis period of 2020-2027. 

Final Thoughts

Polestar, much like many other businesses, has certainly seen its own form of digital transformation over the last year and systems used to help us work from home remain a key part of our professional toolkit. It is exciting to see the continued growth and prospects for the IT/business process outsourcing sector – if you have any questions you’d like to ask about your own business, don’t hesitate to get in contact.

Global Business Process Outsourcing (BPO) Market to Reach $230. 3 Billion by 2027. Amid the COVID-19 crisis, the global market for Business Process Outsourcing (BPO) estimated at US$161

By Rebecca Garland on 24/05/2021