Global Legal Process Outsourcing Market 2014 -2010 – India Dominates as Europe Opens up

According to a NASSCOM-CRISIL study, India is a dominant player in the Global Legal Process Outsourcing industry and is expected to continue its growth at an average rate of 25%-30% annually. NASSCOM highlights that the Indian LPO sector has engaged more than 18,000 professionals currently with annual revenue of USD 960 million and is expected to grow to USD 1.3 billion by 2015. The global market is expected to grow to $8.56 billion in 2020, from $1.39 billion at the end of 2013, according to estimates from Grand View Research. The market is growing at over 25% on a consolidated annual growth rate basis. The US is the dominant market for the legal process outsourcing industry and Indian LPO players are seeing opportunities in Europe as financial services firms and companies on the continent look to cut costs. "Europe is opening up to legal process outsourcing and we see a lot of interest from India-based LPOs. Within a year or two we will start to see definite momentum in them setting up delivery locations on the continent," Andrew Burgess, director at UK-based outsourcing advisory Source said in an interview to Economic Times. "We have just seen demand from European banks which are facing regulatory pressures. We already have one European bank as a customer, another deal is just in closing and more deals are in the pipeline," Mohan Ayyangar, chief operating officer of LPO firm Pangea3, told Economic Times.

Indian LPOs have significantly moved up the value chain wherein initially legal research assignments related to finding case laws, statutes, rules and regulations were outsourced but  more work is now being outsourced related to preparing preliminary drafts of legal documents for use in foreign courts. Further tasks such as contract management, patent drafting, prior-art searches, due diligence and even litigation support, in the form of document review, are also being outsourced to Indian LPOs. Most of the LPO work done in India is outsourced by financial Services firms but other industry segments are also looking to outsource legal work to India particularly MNCs that operates in many countries need to maintain different legal documents and requirements as per the local jurisdiction requirements. "We are seeing an increased demand from Europe from global Fortune 500 companies that have operations in Europe and from the ones that are headquartered there. It's a very important market for us and we are expanding our existing operations," Pavan Vaish, global chief operating officer for UnitedLex Corp told Economic Times.

Europe presents a big challenge for Indian LPO players both in terms of Language and legal systems. “LPO services started in document review and the discovery space and the main pick up was seen in common law countries. We will have to look at LPO in Europe differently and look at more process-oriented services like intellectual properly, compliance and contract management," Kunal Purohit, country head for private equity-backed Integreon, told to Economic Times. Indian LPO is smaller in size but gradually increasing its size and is expected to continue its growth in the near future. Competition from countries like Vietnam, China, Hungary, Czech Republic and the Philippines is increasing but Indian companies will continue to dominate due to the quality of work and talent Indian LPOs offer, rather than their lower costs.

Global Procurement Outsourcing Market 2014 – Expected to continue growth

According to Everest group Research, the procurement outsourcing market grew by 12 % (YoY) in 2013, and is expected to grow by 10-12 per cent in 2014. Everest Group further forecasts the market will expand to between $270 billion (£158 billion) and $275 billion (£161 billion) in spend, and reach $2.2 billion (£1.3 billion) in annualized contract value in 2014 compared to managed spend of $254 billion (£149 billion) and $2 billion (£1.2 billion) in annualized contract value in 2013.

TechNavio's analysts forecast the Global Procurement Outsourcing Market to grow at a CAGR of 22.48 percent over the period 2013-2018. According to research from Information Services Group (ISG), the first half of 2014 has seen a decrease in the number of companies outsourcing procurement work and the outsourcing market as a whole achieved a record-high annual contract value during the second quarter, reaching $6.4 billion (£3.7 billion). Based on the performance seen during the first half of the year, ISG expects annual outsourcing contract value to grow 25 per cent over the year as a whole.

Everest Group also highlighted emerging markets of Asia Pacific, Middle East and Africa, and Latin America are driving the procurement outsourcing market growth and more end to end procurement process outsourcing deals also tripled in the past three years. Everest Group said: “The market is currently in a state of flux, with record new deal signings and a record number of terminations, simultaneously. Such volatility, attributed to switching of service providers, is an indication of reducing stickiness”.

The prime value proposition for procurement outsourcing still remains cost and spending cuts but other functions like category expertise, technology related and governance and compliance related is also on rise. Collaboration between procurement and other enterprise functions like Finance & Accounting, Human Resource, Supply Chain and Manufacturing. Accenture, IBM followed by Indian vendors dominate the market and India dominates the delivery location as most of the PO work is done from India based on the location of the number of Full Time Equivalent employees. Manufacturing segment followed by Financial Services, CPG & Retail, Energy & Utilities are the verticals that are outsourcing the procurement activities.

Procurement outsourcing is subcontracting of key procurement requirements of an organization to a third-party vendor who has expertise in the required domains which helps businesses to focus on their core business activities and benefit from reduced costs and spending generated by PO vendors. But businesses have to be careful in PO as they have to clearly define the performance criteria and SLAs so that the process moves in line with the business objectives. According to Abhishek Menon, practice director at Everest Group, “Procurement outsourcing makes an attractive business case for both buyers and service providers who have remained disciplined, vigilant and progressive.” 

Global SaaS Market 2014 – 2018 – Continues to drive growth in Cloud Computing Market

Global Software as Service market is expected US$53 billion by 2018, or 59 per cent of the enterprise public cloud computing market from the current 2013 revenues of US$23.2 billion, according to Juniper Research and also expects the overall enterprise cloud computing market to reach US$90.7 billion by 2018. According to Forrester Research, the total public cloud services market revenues were US$58 billion in 2013, is expected to grow to $72 billion in 2014 and expected to reach US$191 billion by 2020. Software as a Service (SaaS) solutions accounted for $36 billion in revenue in 2013. SaaS market has reached significant maturity levels and well established in several application categories like sales force automation, customer relationship management, human resource management, eProcurement and ePurchasing, replacement of existing licensed software. Cloud platforms, led by Amazon Web Services LLC, with revenues of $4.7 billion in 2013 but traditional IT partners IBM, HP and Microsoft are fast catching up with their own set of offerings and market is becoming highly competitive. The other two segments of cloud computing Platform as a Service (PaaS) and Infrastructure as a Service (IaaS) are also expected to continue growth. But these two segments face certain critical issues in terms of data security, compliance and portability. “Both PaaS and IaaS will experience significant growth over the forecast period as new applications, developed specifically for the cloud to harness workloads such as big data analysis, benefit from the PaaS ‘fast-track’ model,” Juniper says.

According to San Diego-based investment firm Software Equity Group, SaaS software revenues will contribute around 25% of the overall software market in the next five years. Research firm Gartner estimated that global spending on SaaS will reach $22.1 billion by 2015. Some software vendors are converting their software delivery and revenue models to SaaS, while others acquire SaaS companies to gain access to this market. SaaS offerings are predominantly based on subscription models where enterprise customers access the software in the cloud by paying monthly subscriptions which is totally different from the traditional software license and maintenance models where customers have to pay large upfront perpetual license fee. With the emergence and development of networking equipment, platforms and access devices like smartphones and handheld devices, SaaS based on subscription model is picking up and customers can easily access data and applications form anywhere, at any time, on any device. Despite this there are certain concerns for CIOs who are not totally adopting the SaaS model as there are security concerns, switching costs, regulatory concerns and also cloud outages and failures too. Adoption of cloud based models is further expected to grow in the next five years as the technologies mature and more applications and services are offered on the cloud. Companies too need to rethink their IT investment strategy as Cloud Computing offers a significant level of cost savings in terms of IT infrastructure investments.

Finance & Accounting Outsourcing Market - Beyond Costs moving to Transformation

According to an article in www.the-outsocurcing .com written by Saranya Sundararaja, Senior Research Analyst at Beroe Inc., the Finance & Accounting BPO market is expected to surpass US$ 25 billion in 2013, and grow at a CAGR of around 8% between 2012 and 2017. The overall Global BPO market is estimated to be US$304 billion and the share of F&A BPO of the total market is 8%. Most of the organizations (75%) have outsourced their FAO mostly termed as P2P (procure to pay), O2C (order to cash) and R2R (record to report). The key factors driving the growth of this market are primarily cost savings (ranging 25% - 40% on current cost base), labor arbitrage (low cost locations labor cost is one third of the developed markets labor cost), efficiency focus, standardization, innovation and innovative technologies. Most of the Fortune 500 companies outsource primarily transactions related to Accounts Payable, Accounts Receivable, Payroll and General Accounting. A growing number of technology companies are leveraging third-party service delivery, with the number of global services agreements rising from 20 per year to 50 a year over the last ten years.  The average length of contract [5 years] and average size of contract ($4.7 million for F&A) is relatively unchanged, according to recent Everest Group research. The largest buyers of FAO services are Telecom, Manufacturing and BFSI, however, in terms of growth, Telecom, Media and Publishing, and Retail are facing highest growth (CAGR of 8-10%).

F&A BPO Market has matured over the years and with the entry of new players like small, medium and large players over the years, the market also has become highly competitive. Most of the F&A outsourcing contracts these days have either outcome based pricing model or gain sharing model where the pricing is tied to achieving certain specific outcomes or goals. Clients are demanding more from the vendors other than cost savings they want the vendors to participate in their business transformation and create significant impact. Financial Planning and Analysis, Budgeting, Forecasting and Internal Audit are some of the processes that are being outsourced to third party vendors which are high risk and high pay in nature. In terms of business transformational activities like Financial Process Consulting, Change management and supporting innovation roadmap, the level of outsourcing has increased by 20% to 25% over the last 3 years, according to Saranya Sundararaja, Senior Research Analyst at Beroe Inc. Another important aspect is the integration of analytics into the F&A BPO where some of the vendors are also offering predictive analytics and other advanced data analytics offerings along with the traditional Reporting to clients as well. Indian BPO Vendors have built significant market share in the F&A BPO market over the years and they now have to build skills or acquire skills that help them in offering high end judgment based services to the clients and move up the value chain.

Global Medical Transcription market continues its growth till 2019 due to Cost Savings

According to Transparency Market Research Report, Medical Transcription market globally is expected to grow at a CAGR of 5.6% from 2013 to 2019, to reach an estimated value of USD 60.6 million in 2019, the market was valued at USD 41.4 million in 2012.  The report classified the medical transcription services based on service types into History and Physical Report (H&P), Discharge Summary (DS), Operative Note or Report (OP), Consultation Report (CONSULTS), Others (Pathology Report (PATH) & Radiology Report (X rays or radiographs)) market. CONSULT reports is largest among all the other reports in the medical transcription services market as these reports are repeatedly produced for single patients undergoing treatment each time the patient visits the specialist. It is expected that the global market fort CONSULT reports will reach USD 21.1 million with the market growing at a CAGR of 3.3% from 2013 to 2019. H&P reports share of overall medical transcription services market has increased as both inpatients as well as outpatients are being maintained both to reduce the risk of reimbursement issues. Outsourcing is the most preferred mode of service procurement in medical transcription as internationally operating healthcare organizations need to efficiently run the operations, reduce costs, maintain up-to-date patient health records, facilitate reimbursement and claims process, and also due to regulatory constraints.

Medical transcription jobs are outsourced to offshore companies and freelancers as the hospitals and healthcare organizations have savings in terms of overhead costs of setting up for in-house department for medical transcription and the staff costs are high compared to low cost countries like India and Philippines where the staff costs will be one third of the cost in United States. United States followed by United Kingdom and Canada outsource medical transcription jobs to low cost countries like India, Philippines, etc. Medical Transcription vendors can handle significant volumes efficiently and maintain the health and medical records without errors will allow the hospitals and Medical professionals to focus on improving the services to patients and also improve the healthcare. With significant changes in the United States Healthcare like Patient Protection and Affordable Healthcare Act, compulsory health insurance and aging populations the market is expected to continue its growth in the next five years. The North America medical transcription services market was worth more than USD 18 million and is expected to grow at a CAGR of over 5% in the forecast period. But Indian Medical transcription vendors are facing severe competition from Philippines, China and other countries as the vendors in these countries with support of government incentives are also bidding for the contracts. Moreover India is losing its labor arbitrage as the cost of living increases. Even the Healthcare payers and providers in the United States are also looking to cut costs due to increase in competition and government regulations.

Procurement & Supply Chain Management Software Market 2013- Strategic Importance

Procurement plays a critical role in cutting costs of acquiring the raw materials and other materials for the company’s operations. Company’s across the globe have automated this process and deployed advanced software technologies to effectively manage their procurement operations there by reducing costs and also surviving in the highly competitive markets. For offering the products and services at the lowest possible price and with good profit margins business managers have realized the importance of strategic sourcing and procurement and deployed software technologies to manage this critical business function. For materials that are high value in nature, whose prices constantly change based on the market conditions and whose availability is also highly competitive as competitors too fight for the same materials strategic sourcing and procurement is critical strategy.

According to Gartner, supply chain management and procurement software market grew by 7.3 per cent to $8.9 billion (£5.27 billion) in 2013. SAP dominated with number one position for more than a decade with a 23.9 per cent market share, growing its revenue by 24 per cent from $1.7 billion (£1.02 billion) in 2012 to $2.14 billion (£1.27 billion) in 2013. Oracle is second in the market with a market share of 16.3 per cent, down on 17.4 per cent in 2012, and revenue of $1.46 billion (£861.5 million), up just 0.1 per cent on 2012. JDA Software remained in third place in 2013 and according to Gartner a “year of transition as it worked through product rationalization and integration of several years of acquisitions and the 2013 merger with RedPraire. Gartner said the market grew because supply chain investments “kept their priority”, even as IT budget managers “remained cautious”. Chad Eschinger, research VP at Gartner, said: “Both influences have impacted strategic planning processes and have resulted in stronger price-based competition and smaller contracts. Cloud and subscription-based pricing is shifting revenue streams and influencing growth.”

Investment in Procurement and supply chain management software will lead to supplier relationship management, reduction in errors and quality issues, efficient and timely supply of the materials, reducing cost, reducing support costs. Even procurement managers using software can improve their productivity, achieve the strategic goals, negotiate efficiently, avoid unnecessary legal disputes and conflicts, manage their work and provide the relevant and necessary reports to the finance teams and top management. Procurement BPO is one of the critical process for the Indian IT & BPO Vendors and companies that outsource this function to third party vendors in India have over the years have seen significant cost reduction. But Procurement BPO market has matured and the companies are looking for vendors who will bring strategic impact to their business not only reduce costs. For doing so the automation and software technologies play a significant role and even Indian IT & BPO vendors are also developing products in this segment.

Global Healthcare Analytics Market 2013-2020 - Growth driven by Predictive & Prescriptive Analytics

Healthcare analytics gained prominence since past few years as number of new companies have emerged that offer specific analytical tools that use statistical, contextual, quantitative, predictive, cognitive tools to analyze the huge chunks of data that is generated by healthcare companies. Huge amounts of data are being generated by healthcare companies that need to be analyzed for efficient decision making by the managers. Healthcare analytics uses statistical tools and techniques to analyze healthcare-related data in order to analyze operational performance or clinical outcomes to improve the quality and efficiency of clinical and business processes and performance. The global market is estimated to be $4.43billion in 2013 and is expected to reach $21.35 billion by 2020, at a CAGR of 25.2%. Growth is mainly driven by predictive analytics and prescriptive analytics in the U.S. and Asia, according to a report provided by MarketsandMarkets, a global market research and consulting company. Data analytics particularly the big data analytics is a very important strategic advantage for the company as the companies can look at improving the processes and also design products and services that best suits the needs of the consumers. New technologies like wireless technologies, sensors, mobile devices, etc. have even more fuelled the need for data analytics as more and more data is being captured and this must be used by companies for decision making. Some of the big players in this segment are IBM, Oracle, SAS, etc. Many small and start-ups are also coming focusing particularly on the healthcare analytics segment.

Healthcare analytics is being aggressively adopted by both payers (insurance companies) and providers (hospitals) and some of the most important  functions include improving the accuracy of diagnoses, cost reduction, fraud prevention, revenue generation, service improvement to real-time view of the business. The major driver for business analytics is the return on Investments (ROI), with a median of five years, from 10% to 1,000%, according to a report provided by MarketsandMarkets, a global market research and consulting company. The global market is dominated by the U.S., followed by Europe, Asia, and the Rest of the World. The U.S. will continue to lead the global market till 2020. Apart from the U.S., the Asian region is also expected to drive the market growth. The European market is the second largest market, growing at a lower rate due to the economic crisis. Governments are also incentivizing the companies that are adopting the data analytics tools and also using such tools in the decision making. Governments across the globe spend trillions of dollars on healthcare and they are looking for ways and means of reducing the cost or looking for significant value from their healthcare investments. Despite the advantages there are certain issues and challenges related to healthcare analytics like as data security issues, patient data confidentiality, doctors and hospitals lack of interest in IT adoption, and lack of skilled professional cross-functional analytical skills in medicine, statistics and IT.

Global Healthcare IT Outsourcing Market growth fuelled by Cloud Computing till 2018

Global Healthcare IT Outsourcing market is expected to grow at a CAGR of 7.6%, to reach $50.4 billion by 2018 from $35 billion in 2013 according to a report provided by MarketsandMarkets, a global market research and consulting company. US Healthcare companies accounts for the largest share - 72% - of this market and is expected to reach $36 billion by 2018 from $25 billion in 2013. Asia-Pacific and Rest of the World are expected to register CAGRs of 8.1% and 7.8% (2013 to 2018) respectively, followed by North America (7.6%), and Europe (7.2%). Health insurance companies, healthcare services providing companies, healthcare systems and equipment companies are part of this market segment that have to reduce their operational costs, administrative costs, focus on core processes, implement information technology to run processes and also manage risks and develop new product offerings. Particularly information technology has become a core component for running the companies and offer product and services to customers and in some instances IT has become the competitive advantage. There is a huge demand for Healthcare IT professionals both on the medical and the process front and highly skilled professionals like actuaries, medical coders, medical writers, biostatisticians, physiotherapists, nurses, general physicians, ayurvedic and homeopathic practitioners are needed for healthcare IT industry to offer services like medical coding, medical writing, bio-statics, healthcare and data analytics. Some of the healthcare companies have completely outsourced their IT systems and some have outsourced only key applications like electronic medical records, medical transcription, billing services, claims processing, data analytics.

Availability of low cost highly skilled IT professionals, implementation of new technologies, government regulations like Obama Care, ICD 10 coding and integration of different technologies already being used with the new technologies like cloud computing, mobility and analytics have presented a big opportunity for the Indian IT service vendors like TCS, Infosys, Cognizant, Wipro, HCL Tech, etc. Cloud Computing is being widely adopted by healthcare companies across the globe as there are significant cost benefits associated with this technology as the companies need not invest heavily on hardware like servers, datacenters, etc. Cloud computing is highly flexible, can be accessed from everywhere, uninterrupted service and also helps to scale up the operations at a faster pace but there are certain disadvantages like data security and reliability issues like downtime. Despite these disadvantages the need for reduction in costs, operation times and efficient back office management is must for the success of healthcare companies. Healthcare IT outsourcing vertical has been dominated by Cognizant Technology Solutions, but other players in the Indian IT Services industry like TCS, Infosys, Wipro, HCL Tech have built up significant capabilities and acquired the much needed technical expertise and skills through mergers and acquisitions and also captured some big deals in this segment. All the Indian vendors both the ITO and BPO vendors have exclusive focus on the healthcare IT outsourcing segment and have even referred to this segment as a key growth driver for the industry in terms of both revenues and profits.  

Global Healthcare BPO Market dominated by India, double digit growth till 2018

The Global Healthcare Business Process Outsourcing market is expected to continue its double digit growth for five more years as the healthcare companies that include payer, provider and pharmaceutical outsourcing companies have to adopt BPO to reduce costs, focus on improving the core offerings rather than focus on business processes that are support functions and by outsourcing these noncore business processes they can take advantage of skills and expertise of low cost professionals and also innovation provided by BPO service providers. According to a report provided by MarketsandMarkets, a global market research and consulting company, the global healthcare BPO market is estimated to be $92.3 billion in 2013 and is expected to grow at a CAGR of 10.8% from 2013 to 2018, to reach $188.8 billion by 2018. The payer outsourcing segment is categorized into claims processing, HR services, member services/customer care, and finance and accounts segments. The provider outsourcing segment consists of medical billing, medical coding, medical transcription, and finance and accounts segments. The pharmaceutical outsourcing segment consists of clinical research organizations (CROs), contract manufacturing organizations (CMOs), and non-clinical services segments. Indian healthcare BPO providers targeting the provider and payer market aggressively.

United States Healthcare industry is the largest player in this segment and US Healthcare companies outsource significant portion of their business processes to countries like India (largest Healthcare BPO services provider), Philippines and Latin American countries. Obamamcare, HIPPA compliance and ICD 10 coding are the major regulatory changes that are driving the huge Healthcare BPO market globally and Healthcare BPO service providers in India are expected to dominate and acquire most of the contracts from US Healthcare companies. Claims processing, transcription services and medical coding are some of the core business processes that are outsourced and demand for these services is expected to increase significantly in the near future. Indian Healthcare BPO service providers are well equipped, low cost providers with all the infrastructure facilities needed and prepared for the rising demand in this segment and are aggressively bidding for these contracts although the Philippines based healthcare BPO providers are also looking to compete with Indian players, they lack the skills and expertise that is mandatorily required for the healthcare sector like doctors, nurses, medical coders, transcriptionists, etc.

Pharmaceutical outsourcing is also expected to continue its growth as the pharmaceutical companies are struggling with raising costs in manufacturing, R&D, intense competition in the industry and government regulations is forcing the companies to cut prices of drugs. Not only the manufacturing of drugs is being outsourced but also R&D is also being outsourced to countries like India. Contract manufacturing, contract research and with patents expiring generic drug manufacturing is a big business in India. Pharmaceutical companies across the globe are being forced to innovate new drugs constantly to survive in the market. Low cost, talent base in terms of specific skills and expertise, available of infrastructure and government support are key to India’s success in global Healthcare BPO market.

Global Technology Market 2014 – IT spending worldwide expected to be better

Forrester Research predicts global technology market will grow by 6.2% to $2.22 trillion in 2014, fueled by an improving economy and growing interest in areas such as mobility and cloud computing and the market is dominated by United States followed by Europe that is slowly recovering from recession and even BRIC countries (Brazil, Russia, India and China) too are recovering from sluggish economic growth and Latin America and Eastern Europe, the Middle East, and Africa are expected to do well. The report forecasts technology spending is expected to grow in Brazil (11.6%), Mexico (10.1%), at 11.6% and 10.1%, China and India are also expected to grow 7.7 % each.

According to Forrester analysts growth will pick up pace in 2015 and forecasted to grow by 8.1%. “Tech Twelve country (Canada, the US, Denmark, Finland, the Netherlands, Sweden, Switzerland, the UK, Israel, Australia, Singapore, and New Zealand) CIOs can be more aggressive in their budget plans. Businesses and governments in these countries are eager to embrace new technologies and feel competitive pressure to do so given the pace of adoption by competitors in their own and similar countries,” the report said.

Software will account for the largest share of tech spending in 2014, at $568 billion, followed by IT outsourcing at $442 billion, IT consulting and integration services at $421 billion, computer equipment with $416 billion and communications equipment at $373 billion, according to Forrester's report. CIOs will focus their biggest spending increases on software, where growth globally will be 7.1% (in local currency terms) in 2014 and 10.2% in 2015. Analytics, applications and software-as-a-service (SaaS) applications are expected to see the fastest growth of any IT spending category. IT consulting and implementation services will also raise in line with higher software spending, according to Forrester Research.

Forrester Analysts led by Andrew Bartels expect hardware sales to trail behind software but the tablet market is expected to perform well dragged by slow and modest growth in laptops and PCs. The report also notes that spending on technology such as software as a service, mobile devices and tablets, platform-as-a-service (PaaS); smart computing and big data, real-time predictive analytics and big data tools will grow in 2014. IT outsourcing will be one of the weaker segments in 2014 and it will pick up in 2015, according to the report. Global technology market had seen a tough demand conditions in the past two years and the growth rates had been low which is expected to slightly pick up in 2014 and analysts predict a good growth in 2015. Economic and political instability in many countries across the globe are also a major concern for the technology market growth. Indian market will also see sluggish growth as there is General elections this year and political instability is major concern for the economy.