European organisations – particularly in the UK – have been quick to embrace the advantages of business process outsourcing (BPO).

In the current economic climate, they find outsourcing specific areas of their businesses, such as logistics or human resources, allows them to make cost savings and free up resources to focus on their core competencies. As a result, market research company IDC predicts that the European market for BPO will grow in value from $132.5 billion in 2001 to $231 billion in 2006 – increasing at a compound annual growth rate of 11.8%.

However, Jamie Snowdon, director of IDC’s European services research, warns that the fact the market is still young also means BPO investments may be risky. “To a large extent, Europe is at the start of the BPO learning curve, so user sourcing strategies still have to crystallise,” he says.

In light of this risk, IDC warns organisations to find a manageable balance between which business processes they keep in-house and which they outsource. New BPO customers will also have to hone their supplier management skills to ensure they get the best value possible from large outsourcing engagements, advises IDC.