Outsourcing of Non-core Processes Offers Companies a Route to Manage Costs and Improve Business Efficiency
The South African business process outsourcing (BPO) sector is set to grow significantly over the next five years as companies turn to outsourcing as a means to drive efficiency and remain competitive. For companies navigating through a tumultuous business environment, it has become particularly imperative to rationalise costs and focus on their core business. “The increasing need for businesses to focus on their core business is driving the trend towards outsourcing of non-core, yet critical, processes such as contact centre, IT and financial and accounting,” notes the analyst of this research. “Enterprises confronted with an uncertain economic outlook have sought to improve business efficiency and manage costs in order to remain competitive.”
In seeking to attain these twin objectives, companies have opted to focus their energies on their core business, while outsourcing the non-core aspects to third parties. This strategy not only gives the businesses access to the most up-to-date technologies and practices, but it also ensures rationalisation
and predictability of cost structures. “Another driver of the outsourcing trend seen in South Africa pertains to the shortage and subsequently high cost of skilled personnel,” adds the analyst. “This driver has been crucial particularly in the outsourcing of IT and financial and accounting processes.”
Growing Preference for One-stop Shops to Trigger Consolidation in BPO Sector
Companies are increasingly facing enormous costs to retain in-house expert staff, which helps explain the trend towards outsourcing, particularly, of these business functions. Unlike previously when growth in the BPO sector was predominantly driven by call centre services, evident increase in demand from financial and retail sectors for back-office services will likely see offerings such as IT and financial and accounting services gain traction.
As a substantive trend in the BPO sector, South African companies are increasingly showing preference for service providers offering one-stop shops. This is motivated by companies’ desire to streamline their procurement processes, and control costs associated with servicing multiple outsourcing contracts. In order to capture these opportunities, it is therefore imperative for BPO service providers to increase the breadth of their offerings, culminating in true end-to-end solutions. “To become one-stop shops, service proviers need to develop expand their competencies, and offer integrated solutions,” advises the analyst. “One means of achieving this would be through acquisition of relatively small niche service providers. Frost & Sullivan therefore predicts a notable degree of consolidation in the BPO sector over the next five years.”
Expert Frost & Sullivan analysts thoroughly examine the following market sectors in this research:
- Information technology outsourcing
- Financial and accounting outsourcing
- Contact centre outsourcing
- Knowledge process outsourcing
The aim of this research service is to strategically analyse the South African business process outsourcing and contact centre market. It provides the current and future size of the market. The forecasts are done over three scenarios, each with differing levels of success in the outcome: high road, middle road, and low road. The assumptions associated with each scenario are also presented. More pertinently, the study analyses the demand dynamics of the market, which encompasses identifying the key end users in the financial and retail sectors and how to understand user requirements and trends. It also provides strategic recommendations for current and future market participants.
This Frost & Sullivan research service titled Demand Analysis of the BPO and Contact Centre Market within the South African Financial and Retail Sectors provides revenue forecasts of the BPO market, and insights into demand trends across different industry verticals. In this research, Frost & Sullivan's expert analysts thoroughly examine the following markets: information technology outsourcing, financial and accounting outsourcing, contact centre and knowledge process outsourcing.
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