The BPO market: 19 lessons learned from its past, present and future

By Allan Watton on
BPO market

The Business Process Outsourcing (BPO) market in the UK today is worth c.£16bn and is expected to rise to c.£20bn over the next five years. It currently employs over 200,000 people in around 32,000 businesses and allows user-organisations across the country to focus more of their efforts on core competitive business activities.

Over the last few weeks, we’ve been gathering our combined knowledge in this sector to produce articles on three different perspectives of this market – its past, present and future – to identify the lessons we can all learn to help us better navigate the choppy waters of a strategic BPO project.

This is our summary article on the subject. It’s an overview of our findings, though we would also be keen to know your thoughts on the subject too, so if you have a different perspective, or something to add, please do let us know.

PAST – where Business Process Outsourcing market has come from

Mainstream outsourcing has been a part of commercial reality since the early 1980s, but it was a very different ‘animal’ to the one we look to tame today. Over the last thirty years, the market had its highs and lows, but one of the main changes that has come out of these decades was the creation of ‘Business Process Outsourcing’. This is the specific, and often IT-underpinned solutions that enable client organisations to delegate many of its repetitive or manual tasks to outsourced suppliers, a number of whom have become specialists in this area.

What this change threw a spotlight on was:

    1. Outcomes, while essential to quantify, turned out to be quite tricky to articulate
    2. Suppliers, as a result, become nervous of the vagueness of their cost-profit calculations and therefore started to charge higher prices – a ‘vagueness premium’ if you like
    3. A high proportion of strategic supplier relationships inevitably failed in their first few years
    4. A lack of alignment to business outcomes meant that contract drafting weaknesses become evident, creating bigger challenges for all parties
    5. Clients lack of clarity in business outcomes, and some suppliers inability to ask their clients ‘the right questions’ to probe those requirements, often led to an increase in chargeable change requests linked to the services provided
    6. A lack of client-side retained expertise to guide the relationship and oversee progress was identified.

PRESENT – where the BPO market sits presently

While in some ways the BPO market is almost unrecognisable from the limited-service offerings of those days of old, it is important to recognise that not all of the issues of the past have been consigned to the past.

The most obvious change the market has experienced is in the sophistication of the technology that has been applied to the task of supporting suppliers in their BPO efforts.

    1. The strategic BPO market today is far broader than it’s ever been, taking in research, customer analytics, cybersecurity, automated data processing and so much more.
    2. BPO suppliers are taking more of an ‘everything-as-a-service’ approach to outsourcing these days, so they often try to sell the perception that all a client’s outsourcing needs can be handled by a single organisation.
    3. ‘Big data’ has been utilised to drive more targeted support into developing greater BAU efficiencies.
    4. However, some clients still struggle to quantify business outcomes with enough clarity. In turn, a number of suppliers continue to charge a premium for this ambiguity as and when the inevitable “you didn’t tell us about that” or “you’ve changed your requirements” statements arise post-contract during the implementation of the service and/or solution. As a result, all too many supplier-client relationships become misaligned and/or fail completely. Contract drafting still seems to experience challenges in driving the right behaviours from both parties to achieve a truly collaborative and successful relationship.
    5. Case law has moved on, providing parties with greater clarity on a supplier’s “Expert Responsibilities” and its “duty to warn” which necessitates the supplier to explore much greater clarity in the clients’ service/solution delivery expectations. Many strategic supplier relationships still fall fowl of this not translating into reality.
    6. And, while great strides have been made in clients taking advantage of the benefits a well funded and supported Client Function Team can offer, this is still an underutilised option.

FUTURE – where these BPO services are likely to be headed

Many factors, some of which are unknown to us today, are likely to influence the form the future will take. From our involvement in this complex Business process Outsourcing marketplace over the years, we believe we can see the following trends manifesting themselves:

    1. BPO demands are already changing, and therefore traditional, manual labour solution led contracts are likely to continue to decline. These manual labour led solutions are being replaced with the ongoing permeation of Robotic Process Automation (RPA) ,supported by Artificial Intelligence (AI) solutions, which are often faster, more accurate and efficient options.
    2. Greater efficiencies will result from improved, real-time analytics and data insights.
    3. Greater reliance on RPA solutions will reduce disruption from challenges that have the potential to impact a human workforce, such as Covid-19. RPA will continue to result in reduced cost of supply which can be passed on to BPO clients, increasing the effectiveness of the competitive landscape.
    4. Healthcare and medical facilities will likely increase their demand for specialised, automated BPO services.
    5. The FinTech sector, and others, are likely to invest further in access to more reliable, secure operational environments, with increasing use of AI and blockchain technologies.
    6. There is likely to be an increasing shift from those destinations which specialise in high volume low cost labour to those who have invested heavily in their technology infrastructures.
    7. While the world of RPA and AI may seem like a positive change in the market, it is inevitable that with greater reliance on technology, we will see stresses and strains which will highlight its weaknesses too. Therefore we’d expect that innovation, much more detailed cybersecurity and outcome-based agreements will be built into an increasing number of contracts to better protect parties and maximise the prospects of success.

In summary

The BPO market is expected to continue growing and evolving, adapting to the realities of the world it looks to support. So, while our projections are rooted in considerable experience and industry backed insights, we acknowledge that the future may well be quite different from the one we’ve envisaged.

If you have anything to add to our thoughts and predictions, please do let us know at and if the future you believe may come to be is significantly different and potentially likely to become our reality, then we’d be happy to write an article based on your vision.