Everest Group defines Business-Process-as-a-Service (BPaaS) as a model in which buyers receive standardized business processes on a pay-as-you-go basis by accessing a shared set of resources – people, application, and infrastructure – from a single provider. Advantages of BPaaS model includes potential cost reductions, efficiency in operations, access to best expertise, processes and technologies, and also allows the businesses to focus on the core processes by outsourcing the support functions and this is particularly benefit for SMBs and also Large organizations. According to Everest Group research, BPaaS delivers 35-40% cost savings for small businesses, 25-30% cost savings for medium size businesses and 10% cost savings for large enterprises over the traditional IT+BPO model. Many times there is confusion between SaaS and BPaaS, Gartner clarifies SaaS is an offering that enables a business process and it delivers a fully managed application that client uses to deliver a business outcome whereas BPaaS is a cloud service that delivers a business process and it delivers the business outcome for the client. Forrester is predicting BPaaS will grow from $0.53 B in 2011 to $10.02 B in 2020.
According to Gartner report “Forecast: Public Cloud Services, Worldwide, 2010-2016, 2Q12 Update (ID:G00234814)”, Gartner predicted that BPaaS will grow from $84.1B in 2012 to $144.7B in 2016, generating a global CAGR of 15%. Of the eight subsegments Gartner is tracking in the BPaaS forecast, Cloud Payments (17.8%) Cloud Advertising (17.1%) and Industry Operations (15.1%) are expected to have the greatest CAGR in revenues generated by 2016. In terms of revenue generated, Cloud Advertising is projected to grow from $43.1B in 2011 to $95B in 2016, generating 17.1% CAGR in revenue growth through 2016. Cloud Payments are forecast to grow from $4.7B in 2011 to $10.6B in 2016, generating a CAGR of 17.8% worldwide. E-Commerce Enablement using BPaaS-based platforms is expected to grow from $4.7B in 2011 to $9B in 2016, generating a 13.6% CAGR in revenue globally. Gartner 2011 Annual Survey of 610 Organizations highlights the fact that organizations are currently using or planning to use business process utility (BPU) or BPaaS for BPO exceed 60%.
Most of the Indian IT Vendors including BPO Vendors have developed their own BPaaS offerings and are actively offering them to their clients as these offerings fall under the nonlinear revenue model category that will allow vendors to charge premium pricing leading to higher margins and also fueled by economic slowdown, manpower issues and changing client needs wherein they are looking at outsourcing vendors as business partners who will help them improve both Topline and bottom line. TCS, Infosys, Cognizant Technology, Wipro, HCL Technologies, Genpact, WNS, etc. are all offering BPaaS services or Platform BPO offerings. These services have been developed for the past ten years and Indian IT Vendors are branding these offerings and successfully offering them to their clients. Platform BPO is a win-win offering for both the clients and vendors as they improve their process and service delivery and they will earn more from their clients on outcome basis. There has been significant demand from the Small & Medium Business segment but slowly the large business organizations too are significantly increasing their adoption of the BPaaS.