Europe Ruling in BPO Market

The value of BPO contract awards in Europe increased 80% over the past twelve months while BPO contract value in North America declined by 16% over the same period, shows NelsonHall's BPO index

by Global Services

Global Services

Business Process Outsourcing (BPO) activity over the past twelve months has been much stronger in Europe than in North America, says BPO Index for Q1 2007 released by NelsonHall — a BPO analyst firm. The index shows a strengthening of the pattern observed in 2006, with BPO growth in Europe being maintained and an accompanying relative level of stagnation in the North American BPO market.

The first quarter was the best first quarter for BPO contract awards in five years in Europe . The value of BPO contract awards in Europe increased 80% over the past twelve months while BPO contract value in North America declined by 16% over the same period. On a rolling 12-month basis, Europe now accounts for 50% of global BPO contract activity, overtaking North America with a 40% share of BPO contract value over the period.

The BPO index reveals an increasingly widespread adoption of BPO across Europe , particularly in Benelux and Central Europe , which between them accounted for 13% of BPO contract value in Europe over the past twelve months.

Despite this shift in emphasis to the European market, there are some encouraging signs. While North America BPO contract activity still has some way to go to recover to the peaks of activity in Q1 seen there between 2002 and 2004, the level of BPO contract activity in North America in Q1 2007 was significantly better than in the first quarters of 2006 and 2005. If this level of improvement repeats itself during the next three-quarters in North America , then 2007 is likely to surpass 2005 and 2006 in North America and form something of a recovery in the BPO market there.

While BPO is taking place outside Europe and North America, notably in high cost economies such as Japan and Australia, and in support of infrastructure development in the emerging economies, the contribution to the BPO market from these additional markets remains at approximately five percent of the total market.

Overall outsourcing contract value awarded globally increased nine percent to $61.7 billion, while global BPO contract value awarded increased 17% to $17.8 billion.