Both the mid-market and large market have comparable overall revenue potential (50,000 small businesses in the US alone outsource more than one business function!) However, the mid-market produces higher margin outsourcers.
Buyer adoption varies across geography, industry, and company size however for $1M to $100M: nearly 10% outsource the HR function, 25% IT, and 40% part or all of accounting and finance.
The Value Proposition Demanded by Organizations is Expanding:
- Buyers have moved far beyond cost savings.
- Outsourcing must achieve strategic, operational, technology, human resources, and risk management benefits.
- Pricing is changing to on-demand, pay-as-you-go models:
- Buyers moving away from “Per Hire Fees”
- Non-transactional pricing models such as BPO concepts with performance guarantees and earn out pricing will become prevalent
- In a slowing economy, buyers prefer a componentized model (i.e. pay-as-you-go) over a wide-scoping transformation model. Customer potential for multi-process or entire functions has low penetration, especially in the small and mid-market; but partial outsourcing growth is escalating.
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