Increasing BPO, captive and acquisition activity

In recent months, a number of organisations have announced new business process outsourcing contracts, new set up of captive shared service models, and acquisitions of either BPO firms or shared service centres.  According to latest Everest research, BPO activity has increased by 15% in transaction volumes, and 33% in contract values. The captive market announced 38 new set ups, and M&A activity increased with 12 acquisitions (compared to 9 in the previous quarter).

This signals the turnaround is gaining momentum in shared services and outsourcing, and in a disparate market the competition is as intense as ever before. In particular, the banking and financial services is particularly active with a 41% increase in transactions (largely in banking). This coincides with the iGate CEO Phaneesh Murthy stating that while banking customers plan to increase offshoring, a lot of them will set up their own captive back office centres instead of working with a BPO provider.