IDC Finds Mid-market BPO Adoption Rising and Providers of All Sizes Contending for Share

IDC's recent Mid-market BPO Outlook Survey revealed that the rising adoption of business process outsourcing (BPO) among mid-market firms has already caused both small and large BPO providers to direct their efforts to the mid-market, and has triggered the creation of new BPO providers aimed solely at the mid-market opportunity.  'The survey results point to a mid-market 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 mid-market companies.  Even BPO vendors that have predominantly targeted their services to large companies are now aggressively building up their mid-market portfolios.  IDC has also observed the emergence of new BPO vendors whose primary target is to fulfil the perceived gap in BPO services for mid-market companies.'

IDC recently released two reports based on the Mid-market 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 mid-market 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 mid-market, 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, mid-market 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 mid-market firms.'

Additional key study findings for the HR BPO space include:

- When asked to identify a single most important vendor attribute, mid-market HR respondents chose industry knowledge by a substantial margin

- In order for vendors to succeed in this market, they will need to help mid-market 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.

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