Relentless cost-cutting by businesses – and banks in particular – is expected to see the outsourcing sector grow by 6% annually for the next six years, according to an annual report from global property firm Cushman & Wakefield.
This year’s Where in the World assessment of the outsourcing industry suggests the trend of service industries to repatriate call centres and other shared service centres (SSC) to improve customer satisfaction is relatively small to the continued drive to offshore back and mid office processes.
'Central Europe has seen rapid growth in outsourced jobs from Western Europe since the millennium. Even assuming high levels of salary growth of 4-5% annually, compared to just 1-2% in Western Europe, it will take 15 to 20 years for the salary gap to narrow from its current ratio of about 1:3 to around half,' commented one of the report’s authors, Neil McLocklin, Cushman & Wakefield's co-head of strategic consulting (EMEA).
The report says this is because the wage gap between advanced economies and the emerging locations where many outsourced jobs are based is not expected to narrow sufficiently for many years to come.
In addition, more established outsourcing locations such as Poland face other pressures, including increased competition from new lower-cost locations in neighbouring countries such as Romania and the rapid growth of advanced Robotic Process Automation and cognitive computing.
Challenging demographic trends and the migration of skilled labour especially from secondary cities to western Europe may also affect current European call centre hotspots.
Globally, India has retained its position as the world’s leading outsourcing market with 56% total market share while the Philippines takes second place on 15%.
The Where in the World report ranks nations according to their attractiveness for Business Process Outsourcing (BPO) – taking into account factors including cost, quality of service and their political and economic stability. It separates these markets into two categories: ‘Mature’ and ‘Pioneering’.
'In pioneering outsourcing markets, Vietnam retains its global number one spot from last year. Europe’s top performer is Lithuania, up to third position from its fifth placing in 2015,' said the report’s fellow author, Tamas Polster, co-head of Strategic Consulting (EMEA).
'Although outsourcing is facing pressures from rapid advances in automation, it will remain a growth industry for many years to come. It is, however, a business service that needs to be chosen by its customers with great care,' Polster concluded.
