The market could be worth $3 billion in 2016

The local business process outsourcing (BPO) sector is set to grow over the next five years, according to Frost & Sullivan.

The report, Demand Analysis of the BPO and Contact Centre Market within the South African Financial and Retail Sectors, says in 2011, the market earned revenue of $1.3 billion. This is estimated to reach $3.06 billion in 2016.

The research covers outsourcing of the following business processes: contact centres, IT, financial and accounting, and knowledge processes.

“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 Frost & Sullivan’s ICT industry analyst Ishe Zingoni. “Enterprises confronted with an uncertain economic outlook have sought to improve business efficiency and manage costs in order to remain competitive.

“Another driver of the outsourcing trend seen in South Africa pertains to the shortage, and subsequently, high cost of skilled personnel,” adds Zingoni. “This driver has been crucial, particularly in the outsourcing of IT and financial and accounting processes.”

One of the trends in the BPO sector locally is a preference for “one-stop shops” – service providers which can offer a range of BPO services. According to Frost & Sullivan, this is motivated by a need to streamline processes and reduce costs. If service providers want to benefit from these opportunities in the market, says Frost & Sullivan, they must increase their breadth of offering.

“In order to become one-stop shops, service providers need to develop and expand their competencies and offer integrated solutions,” advises Zingoni. “One way of achieving this would be through the acquisition of relatively small niche service providers. As a result, Frost & Sullivan predicts a notable degree of consolidation in the BPO sector over the next five years.”