Asia-Pacific’s business process outsourcing (BPO) market will reach revenues of US$17.47 billion in 2015, a compound annual growth rate (CAGR) of 9.3 per cent from the US$11.18 billion it hit in 2010, predicts Ovum in a new report.

The independent technology analyst finds that strong growth in emerging economies such as India, Greater China (includes Taiwan and Hong Kong) and South Korea is driving the global market forward, as businesses in these regions wake up to the benefits of BPO.

According to Ovum’s forecast, the BPO market in Greater China will increase at a CAGR of 16.1 per cent from over the forecast period (the end of 2010 to the end of 2015). Meanwhile India and South Korea’s market will increase by 15.7 and 14.6 per cent for the same period, respectively. Among the developed economies in Asia-Pacific, Australia and New Zealand’s BPO market (ANZ) shows the most traction with a CAGR of 7.4 per cent over the forecast period.

The global business process outsourcing (BPO) market will reach revenues of $93.4 billion in 2015, a compound annual growth rate (CAGR) of 5.4 per cent from the $71.92 billion it hit in 2010.

Ovum analyst Hansa Iyengar commented: “In the post-recession business environment, it has become imperative for enterprises to keep costs under tight control to maintain competitiveness. BPO eliminates the need to invest in people and systems to manage non-core processes, potentially reducing costs and increasing efficiency. By outsourcing these processes, enterprises can focus their resources on growing their core business.

“Moreover, BPO is also gaining ground in areas such as HR, engineering design, and research and development outsourcing. Enterprises are realising that outsourcing these areas can be an effective way to reduce costs, increase efficiency, and speed up go-to-market for new products, much in the same way that outsourcing back-office processes can.”

According to Iyengar, it will be developed economies that will exploit these new BPO areas the most, with emerging markets newer to the arena choosing to test the water with first-generation outsourcing such as customer care, payroll processing, and helpdesks.

The markets in North America and the UK and Ireland will also see growth, albeit at slower CAGRs of 2.7 per cent and 4.1 per cent, respectively. Iyengar commented: “The marginal growth in North America during Ovum’s forecast period is due to the maturity of the region’s market, with enterprises there having embraced BPO decades ago. North America’s slow recovery from the global recession and subsequent cautious spending by enterprises are also having an impact.”

According to Iyengar, to take advantage of the predicted growth in outsourcing vendors will need to be aware that pricing of contracts is the major issue at the negotiating table. She added: “Enterprises are moving away from multi-billion-dollar, single-vendor deals and spreading out their investments and risks.

“Meanwhile, the small and medium-sized enterprise segment is rapidly opening up to outsourcing. Vendors need to be prepared with a game plan to meet the demands of this market. Mainly these are for low-priced, highly flexible and scalable solutions, which are accompanied by the option to customise offerings and personalised customer service.”

Source: Times of India

Human rights and labor groups in Taiwan protested last week to declare their opposition to the outsourcing of call centers to China and asked the country’s media regulator to take action.

Members from the Taiwan Association for Human Rights, the Taiwan Labor Front, and the Alliance for Fair Tax Reform gathered in front of the National Communication Commission (NCC) and chanted slogans such as “call center outsourcing to China is illegal” and “save young people from losing jobs.”

The hodgepodge of groups coalesced over the likelihood that outsourcing takes away jobs for young people, as well as people with physical or mental disabilities, who are frequently employed at call centers.

Lai Chung-chiang, an executive member of the human rights association, cited government labor statistics that reported a loss of over 3,000 call center jobs since 2004.

In 2004, the number of people working as call center operators at telecommunications companies in Taiwan was 8,277. Only 4,513 people were employed in the sector by 2010.

According to the Council of Labor Affairs, young people between the ages of 22 to 35 account for the largest group of call center operators, he said.

“The loss of jobs does not mean a weaker local economy, because all of the telecommunications companies are making profits,” Lai said.

He also claimed that outsourcing of call centers to China would jeopardize local consumers’ rights because in China, there is no law to protect the confidential data of customers.

The groups suspect local telecommunications companies have exported these jobs because of lower wages across the strait, and called on the NCC to investigate the matter.

They singled out Far EasTone Telecommunications Co. Ltd. as a culprit.

The company later refuted the groups’ claim, saying its call center is located in Kaohsiung.

In response, Liang Wen-hsing, a specialist at the NCC’s operational management department, told the CNA they have done a similar investigation on whether local telecommunications operators had indeed shifted call center operations to China.

Although refusing to confirm this is happening, the NCC would only say that it did not find any violations of the law.

However, the agency said it will accept the groups’ call and launch another inquiry.

Since 2010, Taiwanese telecommunications operators have been allowed to open up companies in China, but they are forbidden to deal with or to open up companies in China, but they are forbidden to deal with or disclose the personal data of Taiwanese customers to its Chinese.

Source: FocusTaiwan

NEC, Fujitsu to boost outsourcing

The Wall Street Journal reported that Asia’s contract chip producers expect to see their earnings get better this year, as the global financial revival boosts demand, along with more semiconductor companies globally come across to outsource additional production.

Increasing outsourcing orders, particularly from Japanese incorporated device producers such as NEC Electronics and Fujitsu Microelectronics, are expected to raise the earnings of contract chip manufacturers Taiwan Semiconductor Manufacturing and United Microelectronics of Taiwan, analysts claim.

Both NEC and Fujitsu are IDMs – established domestic chip producers that handle semiconductor manufacturing. However, as they keep on fighting back with losses, analysts say they are likely to increase outsourcing to keep production costs.

TV producers anticipate Sony outsourcing

According to DigiTimes, Taiwan-based LCD TV manufacturers are likely to account for a big segment of the OEM orders from Sony as the vendor aims to raise its outsourcing capacity, particularly Sony’s three existing associates Wistron, Foxconn Electronics and Compal Electronics.

Sony’s strategy is to boost LCD TV OEM sales, primarily for cheap models, to as much as 40% of its full LCD TV shipments amount in its 2010 financial year. Sony begins discussing among its OEM partners for LCD TV orders for 2011, which may cost up to 15 million units.

Sony distributed 5.4 million LCD TVs in its fiscal third-quarter 2009, up 8% on year. However, proceeds from the partial fall down to $3.76 billion.

Xerox’s BPO industry should deliver

When a company outsources their IT or other business processes, the outsourced firm comes up with a less expensive and more efficient way of handling the work outsourced to them, and that’s valuable. Despite this, outsourced firms rarely reinvent a process entirely – because it’s extremely difficult.

Now that Xerox has spent $6.4 billion in buying ACS, a major player in the business process outsourcing industry, it’s that kind of reinvention that they must deliver.