Offshoring to rise 65% to $3 bn in 2004: Gartner

Offshore business process outsourcing (BPO) is expected to reach $3 billion in 2004, a 65 per cent increase from $1.3 billion in 2003, according to Gartner, a provider of research and analysis on the global information technology industry.

In 2004 offshore BPO is expected to represent 2.3 per cent of the total BPO market. While offshore BPO has experienced high growth rates in the past few years and the market is accelerating in 2004, the industry will not sustain such high revenue increases in the future.

"Offshore BPO is growing fast over the past few years and the market is accelerating in 2004 but the industry will not sustain such high revenue rise in the future," the Gartner study said.

Robert H Brown, principal analyst at Gartner's sourcing group said in a statement, "Offshore BPO is an emerging, but immature, opportunity."

He added, "There will be slower adoption of offshore BPO through 2007. As the service delivery matures, and as users and service providers overcome various operational, cultural and socio-political issues, growth will resume toward the end of the decade and will synchronise more with the overall BPO growth."

"As the service delivery matures and as users and service providers overcome operational, cultural and socio-political issues, growth will resume towards the end of the decade and will synchronise more with the overall BPO growth," Brown said.

A survey of 301 US clients of BPO conducted by Gartner in 2003 showed that 16 per cent were already outsourcing BPO services offshore and 17 per cent were considering outsourcing processes offshore within the next two years.

Gartner said the vast majority of offshore BPO is around contact centres and the remainder for back-office transaction processing services.

It said organisations must not neglect mapping the entire customer processes, particularly the intersection between the parts that are outsourced and functions that are retained.

"The recommended plan for successful outsourcing relationship is planning, integration and management of outsourced channels, functions and processes," Brown said.