The worldwide business process outsourcing (BPO) market is forecast to grow 6.3 percent in 2011 and 5 percent in 2012, according to Gartner, Inc. The outlook for BPO is mixed in developed economies, and this has resulted in a tempering of growth expectations.

"While growth remains strong in developing economies, the United States, the world's largest BPO market, presents a mixed picture for the global market," says Cathy Tornbohm, research vice president at Gartner.

"Emerging markets are faring far better and, generally, multinational companies continue to look to BPO as a means both to reduce costs and to buoy their business operations during the protracted return to a growth environment. We also see an increase in transaction volume, especially in payroll, recruiting, accounts payable, and customer data analytics and knowledge process outsourcing (KPO) activities."

Gartner estimates that North America's BPO market will grow 3.8 percent in 2011. Following strong growth in the third and fourth quarters of 2010, the U.S. economy presented a mixed picture in the second quarter of 2011, and yet CEOs' confidence increased for global businesses.

The U.S. is the largest and most established market for BPO. Canada has also seen major BPO initiatives throughout the decade in the energy sector, as well as an active domestic BPO service provider market. Key vertical markets poised for industry-specific BPO growth through 2014 in North America are retail, healthcare, transportation and utilities.

Within horizontal sectors, dynamic growth is expected for customer selection in the customer relationship management (CRM) and human resources (HR) domains.

Gartner analysts estimate that Western Europe's BPO market will grow 8.9 percent in 2011 in terms of U.S. dollars, as demand for services relating to customer management (CM), finance and

accounting (F&A) and HR BPO continues.

In Europe, Gartner does not see a major wave of deals being brought back in-house. For newer services, such as KPO, there is demand for legal process outsourcing, particularly in the U.K.

Continental Europe has seen demand primarily for payroll services, increasingly with a multicountry service requirement, contact center BPO, and industry-specific processes, such as banking and road tolling.