BPO spend set to boom over next five years

European organisations will spend increasing more on business process outsourcing (BPO) services between now and 2011, a report from Forrester Research has predicted.

In BPO an organisation uses a services company to take over responsibility for a particular business activity such as payroll.

The analyst firm said that its projections for BPO expenditure, growing at a five-year compound annual growth rate of 11.5%, mean that the BPO will see the highest growth of all IT service categories that it tracks.

Sonoko Takahashi, researcher at Forrester Research, said that financial services and public-sector organisations buy the most BPO services.

“Government and public services agencies, especially in the UK, also spend big on BPO, with several councils and government departments closing HR-flavoured deals for payroll and pension administration. Cases include London’s Metropolitan Police contract with LogicaCMG and the UK Crown Prosecution Service’s deal with Atos Origin,” she added.

Organisations will use BPO services in several areas, including human resources, financial services back-office, procurement, finance and accounting, and customer care.

Total European spending will rise from €11.0bn (£7.5bn) in 2006 to €18.9bn in 2011, with human resources BPO attracting the largest spend, followed by spending on financial services back-office BPO.