BPO firms include providers of outsourcing services for tech as well as non-tech functions. The sector’s 2025 index score rose to 120 (normalised to the base year of FY19 = 100), marking a 2-point improvement over last year’s score. This increment was driven by improvements in productivity and cash flow dimensions, which have mitigated the effects of demand slowdown and rising cost pressures on growth and profitability.
Sector performance
Business process outsourcing sector performance, by dimension, is as follows:
- Growth: Overall demand remained subdued amid an uncertain economic environment. However, certain specialised services, such as on-demand language solutions, and select verticals partially offset overall slowdown in growth.
- Profitability: Margins came under pressure due to higher payroll costs and a less-favourable business mix at some firms. However, companies remained proactive and initiated several measures to counter costs, such as reducing real estate footprint, increase automation, and utilising global delivery capabilities.
- Productivity: Workforce optimisation, particularly among tech BPOs shifting toward leaner operating models, has contributed to improved revenue per employee metrics. While asset turnover remained flat year-over-year, ongoing investments in AI could lead to notable improvements in utilisation ahead.
- Cash Flow: Efforts to improve cash collection and reduce overhead expenses boosted liquidity. This strengthened firms' ability to invest in strategic initiatives such as developing AI capabilities, enabling cloud infrastructure, and acquisitions.
Priorities for success
As client priorities shift towards AI-led engagements, leading firms are accelerating the development of their AI capabilities through acquisitions and strategic alliances. Talent remains central to this transformation, with large organisations rolling out training programmes to upskill their workforce in AI skills. Finally, to manage costs and sustain margins in an uncertain environment, firms are pivoting towards leaner operating models to enhance operational efficiency.
How do you compare?
Use the simple interactive comparison tool below to map your company’s key metrics against sector peers. The tool offers a sliding scale to provide approximations for two of the four dimensions (i.e. growth and profitability) used in the creation of the annual GBSI.
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About the author
Global Business Services Index 2025
An annual outside-in view of the Business Services Industry and its performance across 8 key sectors
