BPO Outsourcing Market Landscape & Revenue Growth Advisory Services

Ephor Group is a Management Advisory firm that invests resources in our clients to create wealth producing enterprises.

BPO Landscape


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Ephor Group's Philosophy on Creating Wealth


Ephor Group’s continued focus on the BPO industry is driven by several key trends including:

  1. The need for all businesses to outsource multiple business processes and functions to remain both cost competitive and to gain access to capabilities/expertise/resources/tools otherwise unaffordable;

  2. Increased need for the best technology solution;

  3. Highly complex industry vertical sector specific requirements;

  4. Economical efficiencies driven by recurring revenues due to long-term contracts increase valuations because of high switching costs;

  5. Operational performance driven by people performance;

  6. Increased dissatisfaction with service levels from legacy vendors who refuse to upgrade their capabilities.

Read more about the Ephor Group philosophy and approach to growth and wealth creation.

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The BPO Marketplace


The BPO marketplace continues to enjoy active growth, especially for those BPO vendors which grow based on targeting specific industry vertical segments, despite the roller coaster economy.

 

Looking forward to end of the year 2014 and beyond, robust M&A consolidation after a period of significant investment in infrastructure is forecast. M&A deal activity is expected to continue trending up with valuations remaining relatively stable, with notable exception for a few leaders whom have "crossed the chasm" to a better operating model and are realizing efficiencies.

 

The BPO growth is aided by several economic factors and market trends including:

  • Aging population requires more healthcare, government, and security services.
  • Companies continue to seek ways to better manage their operating costs, and outsource non-core services.
  • Investment in technology automation and application creates significant labor operational efficiencies.

For detailed analysis of any segment of the BPO industry please connect with Ephor on Twitter @ephorG or by Email: ephor[at]ephorgroup.com or by phone: 214.702.6427.

 

Ephor BPO industry analysis includes the following:

  • BPO FrontOffice CRM (single digit growth)
  • BPO Backoffice FAO (single digit growth)
  • Healthcare BPO (double digit growth)
  • Healthcare RCM (double digit growth)
  • Human Resources Outsourcing (single digit growth)

 

The outsourcing marketplace is a highly competitive, fragmented industry that is poised for enormous growth in the next few years as companies apply analytics and technology to improve operations.

 

The major drivers for this growth include:

  1. Costs: As competition intensifies and cost pressures continue to escalate; everything from rising benefits and healthcare costs to labor arbitrage to the cost of capital for companies is continuing to widen.

  2. Competitiveness:
    1. Demand for Service Level Agreements (SLAs) to ensure quality is managed and controlled.
    2. Knowledge and access to intellectual property.
    3. Access to operational process practices that would be too difficult or time consuming to develop in-house.
    4. Access to a larger talent pool and a sustainable source of skills, in particular in science and engineering.
  3.  


The outsourcing marketplace is a multi-hundred billion dollar industry encompassing thousands of providers worldwide.

  • BPO Frontoffice Contact Center Industry. Major changes are driving growth in the contact center industry including: A) Application of technology and analytics at the point of contact to improve customer satisfaction and operational efficiencies, B) Industry vertical process configuration, and C) growing macro economic demands. Front office contracts tenure is increasing from 60/90 day pilots to 6 month programs for SMB and middle market to multi year contracts with the application and integration of technology infrastructure investments. Front Office BPO is a growing market as organizations now spend more than US $300 billion annually on contact center services and is growing at 8 to 12% annually CAGR. The service provider market is highly fragmented with more than 350 service providers with greater than $5M in annual revenues operating in the US market. No single service provider owns more than a five percent market share and the top 10 firms combined account for less than 25 percent of the market. The technology platforms are in the midst of consolidating among the vendors highlighted in the charts above. New software entrants to the market focus on applications that work within the existing technology platforms. While still evolving, BPO platforms are beginning to be consolidated to a few major players paving the way for global, national and regional service providers to approach the mid-market. Adoption is increasing along with vertical specialization (i.e. focusing on healthcare, or hospitality, or professional services).
  • Backoffice Business Process Outsourcing (BPO) also commonly referred to as Financial & Administration Outsourcing (FAO) is driven by the need to improve finance and accounting performance, flexibility, controls, and cost. Some analysts see analytical services superseding the FAO market over the next decade as organizations have data overload yet are short on analytical talent, and ripe with business challenges requiring decision-making information. is the contracting of the operations and responsibilities of a specific business functions (or processes) to a third-party service provider.
    BPO is typically categorized into back office outsourcing - which includes internal business functions such as human resources or finance and accounting, and front office outsourcing - which includes customer-related services such as contact center services.

Ephor Group Growth Capital Expansion Strategy Charles Bedard

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Ephor Group is a strategic advisory firm which provides advisory services to technology software and BPOs.

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