Gartner said the use of offshore resources as an alternative to
domestic BPO is also starting to take off and, by 2007, it predicts
that offshore BPO will account for 14% of the total BPO market,
compared with only 1% in 2003.
"The BPO market is evolving quickly and we see many US service
providers aggressively targeting Europe. Eastern Europe has become
particularly attractive because of good delivery locations and many
global BPO providers are ramping up their capabilities in Prague,
Krakow and Budapest to take on the competition from European BPO
service providers and Indian offshore providers", said Rebecca
Scholl, principal analyst at Gartner.
"Mergers and acquisitions, such as IBM's acquisition of PWC
Consulting and Cap Gemini's acquisition of Ernest & Young, have
also contributed to a change. This has enabled the established
providers to enter the BPO market, and BPO has over time become a
natural extension to the traditional IT services offerings", Scholl
added.
Gartner said the desire to focus on core competencies, cost
reductions and customer service improvements, primarily by large
organisations, are the key drivers to BPO growth in Europe.
BPO adoption in transaction-intensive processes such as payroll,
card processing and claims processing continue to grow, but are now
extending to enterprise processes such as human resources, finance,
accounting and procurement. Several large organisations have signed
comprehensive HR or Finance and Accounting BPO contracts in Europe
over the past three years.
In Europe, the UK leads the way, representing more than 50% of
the total BPO market. The public sector is the most active
industry, followed by financial services.
"Several obstacles are still inhibiting the widespread adoption
of outsourcing in France and Germany, such as legislation regarding
employee transfer. The cost savings associated with economies of
scale and specialisation are tempered by the costs of employee
transfer. Beyond the UK, BPO adoption will grow in the Nordic
countries, Switzerland and the Netherlands because of stronger
cultural acceptance of outsourcing," said Scholl.
