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This IDC study answers the following questions:
What are IDC's predictions and assumptions relating to market forces affecting the Western European BPO services market, and what impact will they have on the market forecasts?
What is the size of the opportunity for core BPO services (including human resources, finance and accounting, procurement, customer care, and industry-specific BPO services) in Western Europe in 2005 and for the next four years?
What are the key recommendations from IDC for maintaining and growing BPO services revenues in the coming years?
Market growth in the Western European BPO services market was again robust, though exchange rate effects boosted this growth by nearly 10%. The performance of service providers in 2004, however, suggested that customer confidence in the BPO model remained strong, as a result of which IDC has made the following key forecasts for the period 2004 to 2009:
Total spending on core BPO services, assuming constant currency, will grow from $17.8 billion to $39.4 billion at a CAGR of 17.2% for the forecast period 2004?2009. The largest of these segments will be customer care (a $15.8 billion market by 2009), followed by industry-specific and human resources BPO.
Industry-specific BPO services spend in Europe is set to rise at a CAGR of 20.2%, from a current spend estimated at $6.1 billion. Spending in this category is dominated by the U.K. market, which accounts for roughly a half or $2.7 billion.
"Productivity, process efficiency and value for money continues to drive demand for BPO services. Put simply, organizations are becoming ever more willing to outsource those business processes which the in-house function is no longer able to support or the business is no longer willing to invest in," says IDC Research Manager Mike Friend.
"Both customers and services providers have demonstrated their belief in the model through the continuing development of new outsourcing opportunities," adds Friend. "This belief in the BPO services model now extends well beyond the U.K., Benelux, and Nordic markets into central and southern Europe."
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