Despite Market Maturity, IDC Forecasts Logistics BPO Market to Grow 12% to Reach $276 Billion by 2007
FRAMINGHAM, MA – APRIL 21, 2003 – Logistics BPO services is a relatively mature market as companies have embraced the outsourcing of logistics components for over a decade. Despite this maturity, the industry has been undergoing transformation, particularly over the last several years. Globalization, technological advancement, speed-to-market issues, and overall economic pressures have caused major shifts in the drivers underlying client demand for BPO services. Against this backdrop, a new study from IDC forecasts the worldwide logistics BPO market to expand from $155.8 billion in 2002 to $276.5 billion in 2007, a five-year compound annual growth rate (CAGR) of 12%.
Logistics BPO vendors have made significant progress evolving in line with – and even sometimes ahead of – client demand, positioning themselves to address these shifting demand drivers. IDC’s new study indicates that today's logistics BPO market has expanded in scope to touch various components of the supply chain, such as supplier management and procurement, as well as components of the demand chain, such as customer care and after-market support.
"If asked to describe in one word the dynamics underlying the logistics BPO industry, that word would be ‘complexity,’” said Romala Ravi, manager for Supply Chain and Logistics Services research at IDC. “Business complexity is driving the outsourcing of logistics functions, yet the demand for more comprehensive, integrated services is in turn driving the complexity of delivering these services. In this environment, it will be critical for logistics vendors to hone in on their strengths and focus on what they do best, rather than trying to be everything to everyone.”
Faced with this mixed bag of opportunities and challenges, IDC believes that success in this market will be maximized if service providers help their clients work through the critical change management issues associated with integrating disparate components of their logistics and supply chain. In addition, it will be important for service providers to work to develop partnerships with their clients, with a view towards a long-term relationship.
This IDC study, Worldwide and U.S. Logistics BPO Services Forecast and Analysis, 2003-2007, (IDC # 29016), presents the annual update to the five-year forecast for the worldwide market for logistics BPO services. The purpose of this document is to identify and quantify the impact of recent trends and events influencing the logistics BPO services opportunity through the fourth quarter of 2002 and their impact on the five-year forecast.
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