Not too long ago, there was considerable concern on the future of the BPO industry. The shift to digital and increased automation was thought to slow demand and emerge as a huge challenge for the industry. Instead, the industry has seen one of its best years in 2021. Digital has been a key catalyst and has helped create both new demand from existing customers as well as a completely new breed of companies. The industry is expected to continue its strong growth trajectory throughout the rest of the decade.
In this study, we looked at 7 of the leading BPOs, including some of the fastest growing ones, whose data is publicly available. In 2021, we saw an average growth of 24% across these 7 companies. We observed 4 distinct trends across these BPOs.
#1 New services and new economy clients on the rise
BPOs are extending their services beyond providing call centre operations. With the wide use of social media, companies now want to gain insights into customer analytics and improve their real-time customer engagement. As such, content monitoring and cybersecurity services now contribute to a bigger portion of BPO revenues compared to before. Other services include AI operations such as data annotation, speech to text and contextual annotation. AI operations contributed to 14% of TaskUs 2021 revenue, amounting to $105 million.
Besides that, BPO’s strong revenue growth has resulted from a strong exposure to new economy clients – companies in high growth industries on innovative technology. TDCX’s new economy clients contributed to 93% of its revenue, while 20% Concentrix’s revenue is comprised of new economy clients (representing +44% Year-over-Year growth).
#2 Geographic expansion to increase influence and serve global customers
In 2021, BPOs expand strategically to take advantage of the geographic diversification. A few BPOs have strengthened their presence in emerging markets, to better fulfill changing client needs and attract multilingual labor. Majorel has recently just launched in 3 new countries – Croatia, North Macedonia and Ghana. Its acquisition of Mayen, Turkey’s independent nearshore CX provider, has also enabled Majorel to spread its influence in the country.
#3 Acquisition as the key growth strategy
To diversify their service portfolios and expand geographically, BPOs continue to acquire companies. To enhance its proposition in vertical industries, Teleperformance acquired Health Advocate – a health platform for the employer market – and Senture – a major BPO operator for public services in the U.S. On the other hand, to enhance end-to-end client transformation, Genpact acquired Hoodoo and Enquero to help elevate clients’ digital experience and data analytics journey.
#4 Hybrid work is the new norm
Hybrid work is here to stay. As the world slowly reopens, 73% of employees still want remote work options to continue, while 67% crave for more in-person work of collaboration1. A blend of both worlds – flexible working options – will be the answer for both parties. In the BPO industry, most of the employees enjoy the benefit of working from home. 63% of Majorel’s employees work from home, while Teleperformance’s hybrid delivery model supports 70% of the group’s employees in remote working.
As the world is challenged by disruptive innovations and talent attrition, BPOs are constantly adapting and evaluating their business approaches to stay competitive in the market. In 2022, we can expect strong growth from BPOs with a mix of both enterprise and new economy clients, further acquisitions for higher value services and continuous geographic expansion to offer better competitive advantage. Innovations for a wider range and more specialised services will also be the focus for BPOs to remain resilient in the ever-evolving industry.
End notes
1Microsoft. (2021, March 22). 2021 work trend index: Annual report the next great disruption is hybrid work – are we ready? Retrieved April 21, 2022, from https://ms-worklab.azureedge.net/files/reports/hybridWork/pdf/2021_Microsoft_WTI_Report_March.pdf