While other sectors of the UK software and IT services (SITS) market were either flat or in recession in 2011 (see UK SITS Market Trends & Forecasts – 2012), TechMarketViews’ newly published report UK Business Process Services Market Trends & Forecasts 2012, shows that the UK BPS market remained in positive territory in 2011, with headline growth of 3.9%. Taking into account CPI inflation, the market did however nudge into the red with a -0.5% decline, reflecting a similar picture of organic revenue declines we have seen from many of the major UK BPS players in the past year (see Capita ‘ups and downs’ in 2011).
The UK BPS market continues to go through a bumpy period as government spending cuts take their toll on existing BPS contract values, and put downward pressure on second generation deals coming through (see Second generation BPS deals: supplier opportunities and challenges). The private sector meanwhile is being impacted by the on-going Eurozone crisis and the UK’s ‘double-dip’ back into recession.
Despite the headwinds, we remain confident that the drivers for BPS remain firmly in place, and compared to other areas of the UK SITS market, will be more resilient to the wider deflationary impacts of disruptors such as the consumerisation of enterprise IT, the cloud and social media. In fact offshoring, arguably the biggest price deflator in BPS, is now seeing more repatriation back to the UK, notably in the private sector (see Aviva brings back calls from WNS).
Our outlook is nonetheless more cautious for the UK BPS market over the next few years. We now expect the market to grow at a compound annual rate (CAGR) of 6.1% between 2011 and 2015. However this still outstrips growth in other areas of the UK SITS market by some way, and it implies over £1.5bn in additional new revenue coming through for suppliers over that period.
There will be pockets of very strong growth, such as in platform-based Business Process-as-a-Service (BPaaS), whereby business processes are accessed on-demand and paid for as a utility. It is very early days, but we expect platform-based BPS, and now also BPaaS, to accelerate adoption over the next few years at the expense of the out-dated lift-and-shift BPO model.
Subscribers to TechMarketView’s BusinessProcessViews research stream can read the analysis, the trends and of course access the all-important numbers in UK BPS Market Trends & Forecasts – 2012 here.
Posted by John O'Brien at '17:00'
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