With BPO contracts now accounting for 52 percent of North American outsourcing contract value, as compared to 39 percent in Q1 2003, organizations are sending a clear signal that they recognize the high value-add that BPO can deliver to their internal and external stakeholders, said NelsonHall.

According to the firm's research, the value of global BPO contract awards in Q1 2004 reached $6.9 billion and accounted for 41 percent of awarded global outsourcing contract value, an increase from 35 percent in Q1 2003. The bulk of BPO contract value (78 percent) was derived from front-office and middle-office related services, with back-office accounting, human resources and procurement outsourcing services representing just 22 percent of global BPO contract value.

As a result of some fall-off in the adoption rate of BPO by the government sector, middle-office BPO contract awards in Q1 2004 were dominated by the financial services and telecommunications sectors (combined totaling 70 percent of BPO contract value). The insurance industry in Q1 2004 came in at 18 percent of total contract value, up one percent from the same quarter in 2003. The banking industry made a significant jump, up from two percent to 12 percent.

Contrary to earlier trends, back-office BPO contract awards in Q1 2004 were dominated by finance and accounting (F&A) services, rather than HR services. NelsonHall stated that the larger growth in F&A outsourcing is due to major organizations beginning to selectively outsource elements of their F&A processes -- such as accounts payable and receivable -- rather than facing the high organizational hurdles involved in full scope F&A outsourcing. Moreover, the firm's research found that the market for procurement services is beginning to emerge more strongly.

By geography, the BPO continues to develop more strongly in North America (68 percent of awarded contract value in Q1 2004) than in Europe (26 percent), with Asia making an increasing contribution (five percent) in Q1 2004.