Business process outsourcing is the outsourcing of white-collar processes to third party suppliers. Unlike project work, BPO contracts and relationships last for a number of years, sometimes moving to an ‘evergreen’ or rolling renewal basis. As the market matures, clients are increasingly viewing BPO as a tool to enable strategic business transformation as well as cost reduction.

There are three key strands within the BPO industry, each one often incorporating technology investment as part of the solution:

• Front office – customer-centric work such as call centre or contact centre management
• Horizontal back-office – processes which are similar across industry verticals such as human resources, finance & accounting, document management and so on.
• Vertical back-office – processes particular to a certain vertical sector. For example, life and pensions administration in the financial services sector.

The potential market for BPO in the UK has been estimated at £94.8bn with only £5.1bn currently let*. Of this £5.1bn expected in 2007, approximately two-thirds of the activity sits within the private sector. The public sector accounts for the remaining activity, including areas such as central and local government, education and health. UK BPO growth overall is expected to remain steady out to 2011 at 10%* with some key markets in the public and private sectors outperforming these figures.

Life, Pensions and Investments is one of the fastest growing areas in the private sector with a CAGR of 14% out to 2011*. CAGR of 11%* is expected in the private sector overall. In the public sector, local government continues to perform strongly (local government and life and pensions are the two most active large-deal sectors in UK BPO) and further opportunities are expected in central government, with a CAGR for the public sector of 10.5%* overall. Health is also a small but fast growing market.

The leading players in the UK business process outsourcing market, ranked by turnover, are: