UK’s BPO service providers haven’t been in the limelight too much. They have largely remained national players with delivery centers within the UK. Even though most of them have been around in the UK market for quite some time, it is only now that they are seen making an entry into offshore locations. The changing outsourcing landscape and global business demands are reasons contributing to this shift.

UK’s outsourcing market has grown substantially. A recent survey done by sourcing advisory firm, TPI points to the fact that the UK has overtaken the US this year to become the leading national market for new outsourcing contracts. TPI says the UK represented over 37 percent of the 11 billion euros market for major outsourcing contracts awarded worldwide so far this year.

There is also a recent study conducted by Forrester, which reveals that European offshore spending is set to treble in the next five years. Forrester also says that the UK will drive a bulk of that spending, with a share of more than 70 percent.

With the market growing so rapidly, UK’s service providers have felt the need to develop offshore delivery centers. In the past few years, leading BPO service companies from the UK have started providing offshore services, primarily from India. Substantiating India’s position as a preferred destination is Jason Spaulding, research analyst, IDC who has been quoted as saying that UK firms will choose India over Central and Eastern Europe to offshore. Currently, 75 percent of executives in the UK prefer India as a BPO destination. However, while understanding the issue, it is important to know that in the past, and as predicted by a recent survey by TPI, a lot of UK-based organizations seem to have preferred the captive model for BPO services.

It is a classic chicken-and-egg story. This ‘conservative’ approach has made many UK companies not go offshore aggressively. On the other hand, many clients say that the reason to go captive is derived from the fear of tackling two unknowns at the same time-the unknown destination, and unknown vendors. In fact, the presence of local companies with whom they have worked for years will give them the comfort factor to outsource.

Maybe this realization has made many BPO companies in the UK flock to India in the last few years. Some have ramped up quite well, and have aggressive plans.

Global Outsourcing spoke to the top players about their relatively delayed foray into offshoring, commendable growth, and how they believe the providers will evolve in the next few years.

Capco’s offshore center in Bangalore is just over a year old. Having been set up in 2004, their headcount has grown from 30 to 100 people in this short period of time. But even in the UK, the company is only six years old. Despite that, it already has 550 employees, with offices in North America, Europe, and Asia. Its exponential growth is tangible, with revenues for 2004 having exceeded 100 million pounds.

Capco’s clients include most of the world’s top 50 financial services institutions, and span the capital markets, private client and asset management, and corporate and investment banking segments. The India office provides services to Capco clients worldwide, and consulting services to Indian-financial services organizations. Offshore services cover technology development and support services, and analytical BPO services, all focused on the financial-services industry. This includes supporting live installations of Capco’s technology products being used by clients worldwide, using a highly skilled technology team in Bangalore.

Padma Parthasarthy, country manager, Capco says, “Our plans are to continue our growth either organically, or through other means. Growth under consideration could be an expansion of office locations, types of services offered, and number of client segments served.”

UK’s service providers such as Capco have felt the need to come to India at this point for several reasons. Until now, most Indian offshore providers have not focused on the UK and continental Europe. However, of late, one has seen a lot more activity on European outsourcing and offshoring deals, for example the ABN Amro deal. The late entry of service providers can also be attributed to the fact that a lot of UK-based organizations seem to opt for the captive model for BPO services, while still continuing to outsource IT services. What remains to be seen, is whether organizations that have a successfully running captive for BPO services, would want to move other services such as IT to it. This approach would allow them to take advantage of synergies, and collaboration between IT and BPO services. An example would be re-engineering a technology platform along with its associated operations services to achieve overall efficiency.