IDC Finds Processing Services to be Dominant in APEJ's Business Outsourcing Landscape
||Online News published in DMReview.com
January 13, 2006
In its latest study of outsourcing trends for the Asia/Pacific excluding Japan (APEJ) market, IDC forecasts the total market size for processing services to achieve a compound annual growth rate (CAGR) of 11.4 percent from 2005-2009 and generate more than $23 billion in revenues by 2009. IDC found Processing Services amounted to $14.9 billion in 2005 and is forecast to exceed $16 billion by end of 2006. More findings are published in the inaugural IDC report, Asia/Pacific (Excluding Japan) Processing Services 2005-2009 Forecast and Analysis (Doc#AP224111M).
Under IDC's definition, business process outsourcing is distinct from processing services as it is smaller and at its early stage of development in many parts of APEJ. IDC regards BPO as more strategic and involves transformational activities that align a company's outsourcing engagements to corporate objectives. On the flip side, engagements that involve high-volume, transactional outsourcing of discrete activities such as payroll and billing are classified under processing services at IDC. Thus, giving rise to the popular phrase "mess for less" for processing services, which is valued distinctly and separately from BPO
The processing services market in itself is varied and diverse, each with its own characteristics and different directions. For example, the finance processing market is very different from the procurement processing market, which in turn is different from the home loans processing market. Processing services providers have to adapt to the diversity and complexity of different cultures and attitudes toward outsourcing in APEJ and the nature of the industry. In mature services economies in the APEJ region, such as Australia and New Zealand, companies realize the cost advantages of processing services outsourcing. However, within the developing services economies like Malaysia and China, processing services outsourcing is used as a leverage towards improving process quality and helping fast-growing companies to flexibly and quickly ramp up and ramp down its services offerings.
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