ISG Study Finds Enterprises Save an Average of 15 Percent with Business Process Outsourcing
17 Junho 2024 - 11:03AM
Business Wire
Despite results, survey of global BPO
decision-makers finds enterprises want more cost savings, greater
innovation and better customer experience from their BPO
programs
Cost savings are the primary motivator for enterprise business
process outsourcing (BPO) programs, and new survey research from
leading global technology research and advisory firm Information
Services Group (ISG) (Nasdaq: III) finds BPO programs are
delivering an average of 15 percent savings over in-house
operations.
The ISG Market Lens™ Business Process Outsourcing (BPO) Study
asked nearly 400 business leaders worldwide about their BPO
practices and plans and found growth in BPO demand is largely being
driven by cost optimization.
Sixty-eight percent of respondents listed reducing the cost of
operations as a top motivator for outsourcing to a managed services
provider, followed by efficiency of processes (50 percent) and
capacity to support their volume of needs (33 percent). Only around
20 percent of enterprises cited service quality, business growth or
innovation as key motivators for outsourcing.
“Business process outsourcing has been largely driven by the
need for cost reduction and efficiency—even for customer-facing
operations—and on the face of it, BPO has delivered very
successfully,” said Michael Dornan, principal analyst and co-author
of the study. “Our study respondents said they have achieved cost
savings of more than 15 percent, on average, by outsourcing
business processes, and have improved their quality performance by
an average of 11 percent over running operations in house.”
While enterprises are seeking and have achieved cost savings
through BPO, the ISG study found that further cost and efficiency
savings are being demanded. At least half of respondents rated
BPO’s ability to deliver capacity, expertise and performance as
very good or excellent, but only 38 percent of respondents rated
the cost savings they had achieved this highly.
“BPO outsourcing has proven to be successful in meeting
enterprise capacity needs and providing access to expertise,
quality and efficiency, but enterprises rate BPO performance lower
for driving direct business outcomes such as innovation, improved
customer experience, growth or direct cost savings,” said Alex
Bakker, ISG Distinguished Analyst and co-author of the study. “This
may be due to the way BPO providers are measured based on specific
process outcomes rather than broader business metrics.”
Over 30 percent of outsourced operations have been outsourced
for ten years or more, the study found. Despite this maturity,
nearly all enterprises studied had made changes to their
outsourcing activity over the past two years and expect to make
further changes over the coming two years, with those changes
almost equally split between BPO expansion and contraction.
The biggest anticipated change involves AI. Around half of
respondents said they expect to reduce external staffing through AI
and automation efforts. This impact will be strongest for customer
operations outsourcing, where 65 percent expect AI and automation
to help them reduce external staffing, and weakest (32 percent) for
finance and procurement operations, which tend to be less mature
and smaller in scale, and where the management of quality and
talent is more often a driving factor, rather than cost alone.
New requirements by BPO providers to build efficiency through AI
technology solutions are not yet impacting BPO provider decisions.
More than 50 percent of respondents cited “industry knowledge and
understanding of their business” as one of their top three provider
decision factors, while fewer than a third mentioned talent
availability and only 12 percent said the provider’s AI and
automation capabilities are a main factor in their decision. This
highlights the need for providers to be able to both support tasks
and understand the broader implications and impact of AI on the
enterprise client’s business.
The ISG Market Lens BPO Study was conducted globally in March
2024 and surveyed 368 executives with decision making
responsibility for business process outsourcing across finance,
accounting, procurement, customer operations and industry-specific
processes.
ISG Market Lens buyer behavior studies combine findings from
surveys of senior-level global executives with expert ISG research
and analysis on market trends and strategic business initiatives.
Recent studies explored digital sustainability, AI, application
development and maintenance, cost optimization, cybersecurity,
global capability centers, network modernization, banking and the
future workplace.
Contact ISG for more information on ISG Market Lens
research.
About ISG
ISG (Information Services Group) (Nasdaq: III) is a leading
global technology research and advisory firm. A trusted business
partner to more than 900 clients, including more than 75 of the
world’s top 100 enterprises, ISG is committed to helping
corporations, public sector organizations, and service and
technology providers achieve operational excellence and faster
growth. The firm specializes in digital transformation services,
including AI and automation, cloud and data analytics; sourcing
advisory; managed governance and risk services; network carrier
services; strategy and operations design; change management; market
intelligence and technology research and analysis. Founded in 2006,
and based in Stamford, Conn., ISG employs more than 1,600
digital-ready professionals operating in more than 20 countries—a
global team known for its innovative thinking, market influence,
deep industry and technology expertise, and world-class research
and analytical capabilities based on the industry’s most
comprehensive marketplace data. For more information, visit
www.isg-one.com.
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version on businesswire.com: https://www.businesswire.com/news/home/20240617123285/en/
Press: Will Thoretz, ISG +1 203 517 3119
will.thoretz@isg-one.com Julianna Sheridan, Matter Communications
for ISG +1 978 518 4520 isg@matternow.com
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