Worldwide Logistics Business Process Outsourcing (BPO) Market to Grow 17% to Reach $308.7 Billion in 2006, IDC Says
FRAMINGHAM, MA, JUNE 10, 2002 – Globalization, the IT-enablement of logistics management functions, the need to integrate multiple channels to market, and the expanded capabilities of logistics service providers will, in combination, drive the adoption of logistics BPO services, a new study from IDC reveals. This study published by IDC's Supply Chain and Logistics Management Services research program, forecasts the worldwide logistics business process outsourcing (BPO) market to grow at a compound annual growth rate (CAGR) of 17% to reach $308.7 billion by 2006.
A combination of demand-side and supply-side factors is driving the logistics BPO market, IDC research indicates. From the demand side, there is a fundamental shift in the way that companies are producing goods and getting these goods to their customers. Globalization, increased reliance on suppliers, increased outsourcing of manufacturing functions, development of direct-to-consumer channels, and the need for speed to market are all making logistics management more complex and challenging than ever before.
From the supply side, IDC research shows that logistics BPO services are becoming more integrated and comprehensive, and service providers are improving their technology capabilities and using technology to drive new efficiencies in logistics management. At the same time, logistics service providers (LSPs) are quickly consolidating global, multifunctional capabilities and reaching out to different market segments.
"2002 will continue to be a buyer's market for logistics BPO services," said Romala Ravi, program manager with IDC's Supply Chain and Logistics Management Services research program. "Technology-enablement of logistics business processes will continue to be a central theme for service providers looking to gain market share. In 2002, as the industry consolidation accelerates and service providers bring to market more comprehensive integrated logistics services, it will become increasingly difficult to categorize and differentiate logistics service providers by their functional expertise alone. Instead, service providers will have to clearly demonstrate the strategic value and efficiencies delivered to the client's logistics management processes."
IDC's study, Worldwide Logistics BPO Forecast and Analysis, 2002-2006 (IDC #26820) presents IDC's market analysis and forecast for the worldwide logistics business process outsourcing market between 2001 and 2006. IDC analyzes the worldwide market by four geographic regions: North America, Western Europe, Asia/Pacific (excluding Japan), and the rest of the world (ROW). The data indicates growth opportunities for each of the coming five years, as well as growth opportunities within specific geographies. Market trends, drivers, and inhibitors and their impact on the forecast are also presented.
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