BPO firms have rebounded meaningfully through Q2 2022 from an aggregate decline of about 5% in revenue during the COVID period. Projected market value is expected to reach $43 million between the end of 2022 and 2027. With a CAGR of 3.4%, the BPO market will make headwinds following its 2020 market value of about $34 million (Bloomberg).
Industry trends continuing to influence the BPO market growth incorporate (a) work from home employment, (b) decreased fixed costs, (c) a reduction in excessive office space and (d) increased speed and efficiency through advanced technology.
Call Center Activity Post-Pandemic
Call centers have increasingly rolled-out technological advancements including voice-recognition, AI-structured software and cloud-based systems to drive efficiency on a broad scale. In a post-pandemic economy, operators have turned to advanced remote-work operations for employees given the development of industry mechanisms. BPO technology has become less costly and more widely accessible for industry operators, eroding barriers to entry and leading to a fragmented landscape for various startups to enter the market.
The surge in new entrants has contributed to overall cost reductions as more workers have joined the industry. As a result, industry profit remained stable over the past five years despite setbacks incurred during the pandemic (IBISWorld).
Over the next five years, industry revenue is expected to increase at an annualized rate of 3.1% for total of $31.8 billion. Downstream effects will enable corporate clients to increase their use of telemarketing services, potentially expanding the outsourcing capabilities of call centers.
Economic Impact into the Future
A recent survey from the National Federation of Independent Businesses (NFIB), asked business owner participants if profitability during the last calendar quarter was higher or lower and what the most important factor was influencing the deviation. Additionally, the survey assessed business performance expectations over the next three months based on planned selling price changes of goods or services (NFIB).
According to the NFIB’s September 2022 Report, the nonprofit’s Small Business Optimism Index dropped 3.6 points in June to 89.5. This marks the sixth consecutive month below the 48-year average of 98.
Curbing Tailwind Trends
Business Process Outsourcing
BPO revenue is projected to continue its upward climb, growing at an annualized rate of 2.4% to $61.6 billion over the next five years.
Compliance with healthcare industry regulations has generated the most substantial revenue, notably, the Patient Protection and Affordable Care Act (PPACA).
Continued expansion of healthcare coverage for Americans will continue to involve significant work influxes and consequently enable demand growth for BPO services catering to private health insurance companies and customers.
Robot Process Automation (RPA) software implementation and execution will continue to drive existing enterprise applications. These software (robot) systems can complete routine tasks and operations previously done by humans with interest in these applications stemming from accounting, finance, and paralegal fields.
Call Centers
As the economy grows, demand for outsourced industry services is likely to increase. Trends in internet usage also influence demand for outsourced services. For example, the adoption of online shopping has driven increased demand for customer service support. With e-commerce constituting a larger percentage of retail sales, downstream customer service demand cannot be supported by customers’ in-house resources alone. However, customers now expect most services to be available when needed, often beyond standard business hours. Companies will need to expand capacity for customer service representatives to handle 24-hour services and call volumes.
