According to recently published research by IDC, spending in Western Europe on "core BPO" services (human resources, finance and accounting, customer care, procurement and industry-specific BPO) reached an estimated $16.3 billion in 2003.

The BPO market has seen increased take-up across industries, countries, large and medium sized public and private sector organizations as well as global multinational organizations such as BP, General Motors, Proctor & Gamble, Swiss Re, Deutsche Bank and BAE SYSTEMS. Fueled by the needs of these organizations to drive down costs and become more adaptive and responsive to customer as well as regulatory demands in extremely competitive industries, these markets are anticipated to grow at an average cumulative growth rate (CAGR) of 18.7% over the forecast period 2003?2008.

"This rapid growth in take up of BPO services doesn't spell the end of the traditional IT services market," said IDC Research Manager Mike Friend. "BPO contracts on average not only remain significantly smaller than IT outsourcing contracts, but accounted for just 18 of the top 100 outsourcing contracts tracked by IDC in 2003. In fact, BPO services in the main are targeted at large organizations where higher volume transactions and therefore economies of scale can generate attractive margins for the service provider. This leaves a substantial market that is not currently being served by BPO providers."

BPO providers have however thrown up a challenge, successfully exploiting a weakness perceived in many large scale ICT infrastructure projects, that these have not delivered the full potential benefit to the client because the focus has been at the corporate rather than the business process level. BPO service providers' primary objective has therefore been to develop strong process management and change management consulting expertise, using technology where appropriate to automate a greater share of the business processes.

This message has found increasing resonance with the customer ? as a result of which several ICT providers have either acquired BPO capabilities (IBM's acquisition of PwC Consulting and Daksh), invested in externalizing their in-house capabilities (T-Systems), or created strategic alliances with leading BPO providers (Capgemini with Vertex or SBS with PwC, for example).

IDC's study Forecast and Analysis of the Western European BPO Market, 2003?2008 (IDC #BP53L) provides an analysis of key market drivers and inhibitors as well as recommendations and actions for BPO providers going forward. The study also includes analysis of the following:

With the competitive landscape in BPO changing rapidly this study also provides an analysis of the leading BPO providers in the European market