Industry Research : Will Cloud Based BPO Revolutionize The Sector?
Technavio analysts forecast the cloud-based BPO market in APAC to grow at a CAGR of more than 14% during the forecast period, according to their latest report.
The research study covers the present scenario and growth prospects of the cloud-based BPO market in APAC for 2016-2020. The report segments the market into four main categories based on services which are human resources (HR), customer support, finance and accounting (F&A), and others. The report also presents the vendor landscape and a corresponding detailed analysis of the top five vendors operating in the market.
The cloud-based BPO market in APAC is in its nascent stage and exhibits significant growth potential during the forecast period. The rising adoption of cloud-based BPO models in APAC, especially by SMEs, is supported by favorable government initiatives across the region. At present, Australia accounts for the largest BPO market in APAC, followed by India.
Technavio ICT analysts highlight the following four factors that are contributing to the growth of the cloud-based BPO market in APAC:
- Increased need for cost-effective business processes
- Alternative to traditional outsourcing model
- Inherent advantages of cloud
- Competitive advantage
Increased need for cost-effective business processes
Small and medium-sized enterprise (SMEs) in India, Indonesia, Malaysia, the Philippines, Thailand, and Vietnam are price-sensitive, have limited budgets, and few staff members to configure and maintain IT products and business process services. Therefore, SMEs are increasingly outsourcing back-office operations that would otherwise require more infrastructure, capital investment, and human resources. Outsourcing these functions enables these firms to cut costs and apply lean concept in their operations.
Enterprise cloud infrastructure is proving to be extremely complex due to multiple application platforms and use of complex equipment. Hence, organizations need additional resources and money to manage these applications effectively. The need for effective management of networks, servers, and related data for application management has spurred the demand for outsourcing business processes.
According to Amit Sharma, a lead analyst at Technavio for cloud computing research, "Operational cost reduction and time saving are considered the most appealing traits of cloud-based BPO services. By outsourcing business processes through the cloud, organizations can execute a sharper focus on their core business activities. Moreover, cloud service providers have a dedicated and highly skilled staff to manage information technology infrastructure."
Alternative to traditional outsourcing model
Deploying cloud-based BPO services is faster and cost-effective than traditional outsourcing models. The cloud-based BPO model helps enterprises cut costs, as it requires minimal IT infrastructure and follows the pay-as-you-go pricing model for convenient and fair usage of services. In addition, it automates most of the services, thus reducing labor count. Enterprises are forging strategic partnerships with service providers to reap maximum benefits of the solution.
In the cloud model, enterprises can choose services in line with their requirements and can always customize the solution for future needs. In addition, cloud integration ensures accessibility of the solution from anywhere.
Inherent advantages of cloud
BPO services include providing consulting, vertical-based solutions, and process re-engineering services. The entire outsourcing solution can be delivered with greater efficiency and effectiveness through the cloud.
Though Japan is a relatively mature market, the adoption rate of BPO services has always been low compared to North America and Western Europe. However, Technavio expects factors such as rising competition, cost-saving pressures, and global business expansion to encourage Japanese companies to adopt cloud-based BPO services. The cloud offers scalability, virtualization, and sharing of IT infrastructure resources. It aids BPO companies to manage technology, processes, and people efficiently.
Cloud-based BPOs help organizations enhance their productivity by streamlining different business processes. Among other benefits — such as cost reduction, cycle time reduction, and flexibility — outsourcing allows the consolidation and standardization of geographically dispersed business processes.
Recently, many business enterprises in APAC have started to outsource their business operations through the cloud model to meet business demands quickly and remain competitive in the market. Companies such as BT Global Services, Telstra Global, and Orange Business Services offer virtual contact center solutions in APAC using cloud technologies.
Technavio expects enterprises in APAC to outsource business operations through the cloud to present a clear value proposition to clients and offer value-added services in order to raise revenues. "Thus, the need to gain competitive advantages such as capacity optimization, reduction in lead times and costs, and the need for higher profits are significant factors propelling the market," says Amit.
Posted by Veronica Silva Cusi, news correspondent
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Published: Friday, September 2, 2016