BFSI BPO Services Market Size, Share & Trends Analysis Report By Services (Customer Service, Finance and Accounting, Human Resource, KPO, Procurement and Supply Chain, Others), By End-User (Banks, Capital Markets, Insurance Companies, Others), By Enterprise Size (Large Enterprises, Small and Medium Enterprises) and By Region(North America, Europe, APAC, Middle East and Africa, LATAM) Forecasts, 2024-2032

Market Overview

The global BFSI BPO services market size was valued at USD 108.6 billion in 2023. It is projected to reach USD 246.3 billion by 2032, growing at a CAGR of 9.52% during the forecast period (2024–2032). Banks and other financial institutions use business process outsourcing (BPO) services, a highly specialized strategy for supporting account activities and business acquisition services throughout the customer's banking lifecycle. These include financial and internal management reporting, budgets, capital management reporting, and regulatory returns. Banks can get high-quality services at low costs when they use outsourcing. According to Deloitte, more and more organizations are using banking BPO services to cut costs and find new customers.

The market is expected to expand due to factors such as the growing need for operational efficiency and transparency in business processes and the increasing demand for cost savings on infrastructure and technology. The BFSI BPO services market is growing because of risk assessment, remote viewing and management, and streamlined solutions for improved security management and reporting.

Market Dynamics

Global BFSI BPO Services Market Drivers

Increasing Demand for Operational Efficiency and Transparency in Business Process

Financial services outsourcing is an essential part of banks. It helps them be more efficient by giving the end user things like support 24 hours a day, seven days a week, over multiple channels like social media, chat, and email, and by taking advantage of sales opportunities outside their geographic area. In addition, BPO modules have transformed significantly in the last few years. Banks that started using BPO early on are now adding new BPO models like cloud-based and mobile-enabled apps, which is helping the market grow. Banks and other financial institutions also use BPOs to manage their business operations better. They offer better collaboration, easier compliance, higher productivity, and better risk management.

Growing Adoption of Cloud Communication Based Business Process Outsourcing Services

Cloud-based BPO services saw a spike in demand during the COVID-19 epidemic, helping banks remain operational despite setbacks. Also, the BPO services solution was crucial to keeping banks, businesses, and financial institutions running smoothly by letting banks use their internal resources for their core skills and essential business functions. Remote access, digital data sharing, automatic reporting, and real-time work floor control are just ways cloud communication aids financial institutions in maximizing efficiency. Forbes says that about 77% of banks use cloud computing to outsource some of their work to other companies. The growing adoption of cloud in BPO is expected to drive market growth over the forecast period.

Global BFSI BPO Services Market Restraint

Security Issues and Privacy Concerns

One of the most critical concerns about BPO implementation is security. The development of the market is hampered by the banks' general lack of knowledge about the dangers of disclosing personal and financial data online. In addition, the possibility of illegal access to customer accounts via compromised login credentials raises significant security and privacy concerns for banks. Also, when banks give sensitive customer data to a BPO service provider, personal information is made public, and the business faces a security risk. For example, in the U.S., the government's official BPO statistics show about 3,500 cyber-attacks on banks in the first seven months. As a result, this has become a significant factor that slows the market's growth.

Global BFSI BPO Services Market Opportunities

Technological Advancement in BPO Services

Traditional BPO services have been used for decades, but the industry's growth has been helped by more people using new technologies like IoT, AI, and robotics process automation. As technology advances in Asia-Pacific countries like India, China, Australia, and Singapore, the BFSI BPO services market is likely to have more chances to grow. Combining "Swiss Post Solutions" BPO services with IoT-based devices enables businesses, banks, and financial institutions to discover and eliminate issues such as redundant assets, resulting in operational efficiencies, cost savings, and effective human resource deployment. In addition, robotic process automation technology is used to automate processes, which ensures that banking operations continue on schedule even when no humans are present.

Regional Analysis

North America Dominates the Global Market

North America is the most significant shareholder in the global BFSI BPO services market and is expected to grow at a CAGR of 8.74% during the forecast period. The United States and Canada are analyzed in the North American market. There has been a surprising uptick in the use of BPO services in the United States, and this trend is predicted to continue over the forecast period. Banks, financial institutions, and businesses in the region are becoming aware of the benefits of using business process outsourcing (BPO) services so that they may devote more resources to their core operations. In addition, because of the rising interest in cloud computing, BPO firms may offer their customers individualized service. Customers' preference for online services over traditional ones is driving expansion in the regional sector.

Europe is expected to grow at a CAGR of 9.18% during the forecast period. The European market is investigated across the United Kingdom, Germany, France, Italy, Spain, the Netherlands, and the rest of Europe. The growth of the European economy and the widespread adoption of cloud-based solutions by businesses of all sizes are the primary forces propelling the industry. The region is experiencing a rise in the usage of digital platforms for the execution of critical financial transactions, as well as an increase in the deployment of artificial intelligence, machine learning, and robotic process automation banking features. The expansion of the business process outsourcing (BPO) sector in the banking and financial services industry is aided by the rising priority placed on superior customer service.

China, India, Japan, Australia, South Korea, Singapore, and the rest of Asia-Pacific are analyzed in the Asia-Pacific BFSI BPO services market. Several factors contribute to the region's rapid development, including emerging economies, rising interest in business process outsourcing (BPO), and increased use of technology in the business financial services industry. The need for BFSI BPO services in the region is expanding due to the above-mentioned reasons. Increasing demand for outsourcing BPO services across a variety of industry verticals, rapid expansion in the building of customer service centers and call centers, and government initiatives and support for the development of the business process outsourcing industry in the region are among the primary drivers driving the market growth.

The LAMEA market is studied globally, including Latin America, the Middle East, and Africa. Due to increased foreign investment, Latin America is better able to compete in the BFSI BPO services industry. Increased corporate investment has made LAMEA the third-most-desirable outsourcing region, behind India and China. Powerful nations like Brazil, Argentina, and Kenya have promising markets for the use of banking services, but the BFSI BPO services market in LAMEA is still in its early stages. In addition, there are significant growth prospects for the BFSI BPO market in the region due to the low penetration of market participants and the lack of understanding concerning the nature and benefits of BPO services.

Segmental Analysis

Based on services, the global market is bifurcated into customer service, finance and accounting, human resources, KPO, procurement and supply chain, and others. The customer service segment is the highest contributor to the market and is expected to grow at a CAGR of 7.35% during the forecast period. Customer service is one of the most significant things a business can do to retain its clients. It includes services like customer service over the phone, customer service over social media, customer service over the phone, and more. Due to more competition in the banking sector, many banks, financial institutions, and insurance companies are forced to focus more on their customers. BFSI BPO services are essential for a bank to manage its marketing, customer retention, and customer relationship management, which are all critical for running a business. Banks also use BPO services because they compete for more to provide better customer service and a more personalized experience.

Finance and accounting outsourcing involves using an outside firm or individual with experience in all accounting areas. Finance and accounting services include daily transaction coding, accounts receivable, accounts payable, payroll, taxation, and financial reporting management. One of the most reputable names in business process outsourcing (BPO) is NTT Data Corporation. With tried-and-true technologies like real-time insights, advanced controls and compliance, data scanning, and recognition software, the company has helped countless businesses turn their accounting and finance departments into valuable strategic assets. Banks and other financial institutions' rising use of finance and accounting outsourcing to perform tasks, including financial data analysis, bank account management, tax preparation, and legal advice, is the primary driver of the market's expansion.

Based on end-users, the global market is bifurcated into banks, capital markets, insurance companies, and others. The bank segment owns the highest market share and is expected to grow at a CAGR of 8.42% during the forecast period. Banks play a significant role in the distribution route for BPO-based consumer services. The term "banking and financial services outsourcing" refers to the practice by which banks and other financial institutions contract outside parties to perform functions formerly handled in-house. Its widespread uptake in the banking and monetary sector is motivated by the need to free up more manpower and capital for more essential tasks. As a strategic instrument, banking business process outsourcing (BPO) helps banks expand their operations and better serve their customers.

The capital market is where investors purchase and sell different types of bonds, stocks, and other financial instruments. In addition, capital markets facilitate the transfer of investors' excess cash to institutions that may put them to productive use by funding a wide range of projects and investments. The two forms of capital markets are primary markets and secondary markets. The primary market is where newly issued stocks and other securities are traded, whereas the secondary market is where these securities that have already been issued are traded. The capital markets BPO area represents a substantial opportunity for service providers, particularly those who recognize that buyers seek service providers who will increase their company value rather than reduce costs.

Based on enterprise size, the global market is bifurcated into large enterprises and small and medium enterprises. The large enterprise segment is the highest contributor to the market and is expected to grow at a CAGR of 8.93% during the forecast period. Large businesses are those that have more than 1,000 workers. When compared to small and medium-sized businesses, large corporations have access to far more funding. The United States, Western Europe, Japan, Russia, and Australia are all examples of economic centers where large-scale businesses can be located. The need for BPO services is growing as large enterprises seek better ways to stay connected, save costs, and gain access to specialized knowledge. Security solutions given by BPO providers for large-scale companies include risk assessment, remote viewing, and management, live monitoring, electronic and biometric access control, streamlined solutions for increased security administration and reporting, and mobile security management.

Small businesses use BPO services and technologies to help their employees do their core jobs more efficiently. Due to a shortage of resources necessary to manage business operations successfully, there has been a growth in the demand for BPO services among small and medium-sized businesses. One of the essential factors in expanding developing economies is the proliferation of small businesses. For small and medium-sized financial institutions to remain competitive in the face of rapidly shifting regulatory requirements and consumer preferences, (BPO) is predicted to grow in popularity over the coming years.

Impact of covid-19

COVID Impact: During COVID-19, supply chain interruptions hampered the trade, causing a lack of raw materials for producers and a delay in delivering finished items in the form of blind bolts to customers. As official prohibitions around the world have been lifted, demand for blind bolts has already begun to rebound to pre-pandemic levels.

Recent Developments

• October 2022- IBM announced the extension of its embeddable AI software portfolio with the release of three new libraries targeted to assist IBM Ecosystem partners, clients, and developers in building their AI-powered solutions and bringing them to market more efficiently, rapidly, and cost-effectively.
• October 2022- Accenture and Atlassian joined forces to provide businesses with enterprise agility services that help them get more out of their technology investments, provide better experiences for their customers and employees, adapt to changing circumstances, and ultimately, grow.