Spending on business-process outsourcing services will continue to increase in coming years, but so will clients' expectations for the quality and breadth of vendors' offerings, according to an IDC study released last week. Worldwide spending on BPO services reached US$405 billion in 2003, an increase of about 8 percent from 2002. Revenues are expected to grow at a compound annual rate of 11 percent through 2008, when they will total $682.5 billion, according to IDC. In a BPO engagement, a company hands over an entire business process or function to an external services provider. This contrasts with traditional IT outsourcing engagements, which involve the transfer of an IT task or process. Fueling the demand for BPO services are companies' desire to reduce costs, focus on their core business, obtain new expertise, and increase efficiency and productivity, IDC said.
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