BPO Futures: Trends and Challenges in 2018


Offshoring and outsourcing used to be the corporate darling but with apps, automation, emerging competition, and protectionist policies, the honeymoon seems to be over. Although global outsourced services have widened its reach in 2017, we predict a further decrease in total revenue from $76.9 in 2016. In 2017, BPO and back-end services accounted for nearly 20%, while KPO/IT services accounted for 80% of globally outsourced business with India still leading the pack, followed by China, and the Philippines. The U.S. and the U.K. remained as the two biggest consumers of services.


The impetus for outsourcing and offshoring is to cut costs with better tax programs and cheap labor rates in countries like India, China, and the Philippines. With capacity issues out of the way, companies can now focus on core processes and expansion strategies. Outsourcing can be done through mainstream companies like call centers, individual contractors who may or may not work under the radar, and start-ups that concentrate on niche fields like programming, analytics, gaming, animation, finance, data services, healthcare, real estate, insurance, collection, and the like.

What used to be a sunshine industry is on the decline at a rate 5-10% since 2014 because of many factors:

  • the rise of AI and automation that displaced workers
  • the emergence of apps
  • competition for low-cost but skilled workers leading to attrition
  • increased wages rising by about 10% per year
  • high wages of senior managers and
  • failure to maintain service level
  • increased competition from emerging outsourcing countries
  • the threat to the security of data
  • repatriation of services.

Over a decade after the initial boom, India and the Philippines keen competitors in the IT and customer service industry. Tholons reported in its industry study that China, Malaysia, Sri Lanka, Vietnam, Indonesia, South Korea, Thailand, Singapore, and Taiwan are encroaching on that supremacy. There is also strong growth in Europe with the U.K., Russia, Poland, Romania, Ireland, Hungary, Slovakia, Serbia, Estonia, and the Czech Republic fast developing in the tech, analytics, animation, and service sectors. In the Americas, the U.S., Canada, Mexico, Costa Rica, Peru, Brazil, Argentina, Uruguay, and Columbia have made it among Tholon’s Top 100 Outsourcing Destinations in 2016. Surprisingly the city of Accra in Ghana ranked 40th, way ahead of South Africa and Australia.
2017 showed a slight increase in total IT-BPO spending at the start of the year but the growth was not sustained. Despite global competition and client complaints about service quality, 4 Indian cities headed by Bangalore made it to the top 5 cities in IT BPO in 2017. Manila (Philippines) slid two notches to 4th place, possibly because of political repercussions, lack of skilled labor in the non-voice sector (including IT), and attrition.
Top 10 Digital Providers in 2017:
  1. India
  2. China
  3. Philippines
  4. Brazil
  5. Mexico
  6. Canada
  7. Chile
  8. Vietnam
  9. Poland
  10. Ireland

Top 10 Concerns of Locators:

  1. Stability and redundancy of utilities (electricity and connectivity)
  2. Ease of starting a business (government regulations)/government corruption
  3. Real estate cost
  4. Infrastructure
  5. Ease of getting construction permits
  6. Expected base-pay of workers
  7. Talent pool quality and numbers
  8. Education
  9. Taxation
  10. National Security