The business process outsourcing (BPO) market is growing at an unprecedented rate as technological advancements transform traditional BPO models to keep up with evolving business needs. As BPO service providers implement and leverage technologies, such as cloud computing, robotics, data analytics, automation, and traditional and generative AI, to streamline processes and improve productivity and quality, digital transformation is becoming a common component—and selling point—for many BPO engagements.
Technology advancements are reshaping the BPO industry by promoting efficiency and minimizing costs. According to Technavio, the global BPO market is estimated to grow by $88.8 billion over the next four years, with a growth rate of 6.2% in 2025 alone. This growth is fueled by the promise of new and emerging technologies as well as access to alternative staffing models that provide increased flexible access to broader talent across the globe.
The convergence of business process services and technologies presents opportunities for both outsourcing customers and service providers, but as with most opportunities comes challenges to consider and address.
These challenges may include:
- The implementation of complex (and potentially costly) digital transformation projects
- Savings commitments dependent on aggressive FTE reductions and productivity projection
- Monitoring of and compliance with laws and regulations, including import/export laws and AI and privacy regulations
- Customer requirements, including relating to the use of certain technologies
- Data use and processing restrictions
Finally, there will always be looming concerns regarding data and system breaches. Since many BPO transactions involve the processing of data-intensive, critical business processes to third-party service providers, both parties must consider the controls, response mechanisms, and remediation responsibilities necessary to prepare for potential data or system breaches. In addition, business continuity, resiliency, and disaster recovery are top of mind when structuring and implementing BPO models.
Contact our Morgan Lewis tech and outsourcing team to discuss how companies are designing contracts to minimize these risks and maximize the benefits in BPO transactions.