Recent Press Releases
05/18/2006

IDC Finds Midmarket BPO Adoption Rising and Providers of All Sizes Contending for Share

FRAMINGHAM, MA – MAY 18, 2006 – IDC's recent Midmarket BPO Outlook Survey revealed that the rising adoption of business process outsourcing (BPO) among midmarket firms has already caused both small and large BPO providers to direct their efforts to the midmarket, and has triggered the creation of new BPO providers aimed solely at the midmarket opportunity.

"The survey results point to a midmarket that is ripe with opportunity for the provision of BPO services," said Romala Ravi, program director, BPO Services at IDC. "Many BPO vendors, large and small, are already working to build and consolidate their BPO solutions and value proposition for midmarket companies. Even BPO vendors that have predominantly targeted their services to large companies are now aggressively building up their midmarket portfolios. IDC has also observed the emergence of new BPO vendors whose primary target is to fulfill the perceived gap in BPO services for midmarket companies."

IDC recently released two reports based on the Midmarket BPO Survey that focus on the human resources (HR) and finance and accounting (F&A) findings, respectively. These reports reveal that the majority of both HR and F&A midmarket respondents are either currently using, will begin using, or are considering adoption of BPO. The majority of both HR and F&A respondents also indicated that they will either increase BPO spending or maintain current levels in the future. Additionally, when respondents were asked which events would cause their company to consider BPO, the need to reduce costs overwhelmingly ranked at the top.

"Given that cost savings is a key driver for BPO in the midmarket, it is not surprising that it is also the number one perceived benefit of BPO," said Lisa Rowan, program manager, HR and Talent Management Services at IDC. "At the same time, midmarket firms are apprehensive about the loss of control that BPO may bring. Therefore, a clear and sustainable value proposition around cost savings is the key component required in the pursuit of BPO among midmarket firms."

Additional key study findings for the HR BPO space include:

— When asked to identify a single most important vendor attribute, midmarket HR respondents chose industry knowledge by a substantial margin

— In order for vendors to succeed in this market, they will need to help midmarket buyers understand the cost of HR within their organizations and educate them on the benefits they'll realize by going to a standard offering

Additional key study findings for the F&A BPO space include:

— Industry knowledge is the primary vendor attribute in F&A BPO vendor selection, along with price competitiveness, business consulting expertise, and technology expertise

— F&A respondents were receptive to an offshore value proposition, as the transactional aspects of F&A are easy targets to be offshored due to the high-volume, repetitive nature of the work involved

— Senior financial managers and relevant department leads are the key stakeholders influencing the company's thinking on BPO

The studies, Midmarket BPO Outlook Study: Finance and Accounting View (IDC #201070) and Midmarket BPO Survey: Customer Adoption Patterns for HR BPO (IDC #200992), report on findings from IDC's Midmarket BPO Outlook Study, which was launched in December 2005 to more closely examine interest, adoption, and spending plans for business process outsourcing (BPO) among midmarket buyers in the United States. Each study focuses on HR and F&A BPO in the midmarket, respectively, and contains information on BPO use and adoption, the midmarket business context, the BPO decision-making process, specific survey results, and essential guidance for vendors looking to penetrate the BPO midmarket opportunity.

About IDC

IDC is the premier global provider of market intelligence, advisory services, and events for the information technology, telecommunications, and consumer technology markets. IDC helps IT professionals, business executives, and the investment community make fact-based decisions on technology purchases and business strategy. Over 850 IDC analysts in 50 countries provide global, regional, and local expertise on technology and industry opportunities and trends. For more than 42 years, IDC has provided strategic insights to help our clients achieve their key business objectives. IDC is a subsidiary of IDG, the world's leading technology media, research, and events company. You can learn more about IDC by visiting www.idc.com .

All product and company names may be trademarks or registered trademarks of their respective holders.

###

I want to learn more about IDG

Please complete all fields below.

Recent Press