BFSI Outsourcing Market Size (2024-2030)

In 2023, the Global BFSI Outsourcing Market was valued at $107.59 billion, and is projected to reach a market size of $185.59 billion by 2030. Over the forecast period of 2024-2030, market is projected to grow at a CAGR of 8.1%.

BFSI outsourcing is a practice by financial institutions to outsource their business operations from third-party service providers for improving productivity and efficiency. Further, outsourcing daily business operations helps in saving costs, improving productivity, and reducing risk related to financial matters. Moreover, outsourcing offers greater scalability to BFSI companies that allow them to manage large volumes of data effectively. Some of the most common types of BFSI outsourcing include IT outsourcing, finance, and accounting outsourcing, BPO (Business Process Outsourcing), and others. Furthermore, with increasing demand for operational efficiency and faster delivery of services, there is an increase in demand for BFSI outsourcing in the market.

Global BFSI Outsourcing Market Drivers:

Increasing demand for operational efficiency has boosted the demand for BFSI outsourcing in the market.

In recent years, there is an increase in the outsourcing of non-core business activities by BFSI that helps them to improve efficiency and productivity. By outsourcing the non-core tasks BFSI can allocate more important resources, time, and money to core tasks that are central to their operations. Further, outsourcing enables BFSI to increase operational efficiency as the third-party vendors provide technologically advanced services that help financial institutions complete tasks faster. These non-core operations include customer support, IT maintenance, back-office operations, data entry, and other tasks, which would have become difficult to manage by BFSI companies alone. Furthermore, outsourcing vendors provide greater scalability to BFSI by managing large volumes of confidential data as per the requirements of BFSI companies.

The emergence of fintech has contributed to the demand for BFSI outsourcing in the market.

Fintech is the use of innovative technology to provide financial services and alter the conventional banking process. BFSI companies lacking technical expertise often outsource IT operations from fintech companies for improving efficiency and catering to increasing consumer demands. These fintech companies offer advanced tech services to BFSI, which include blockchain, AI, data analytics, and others. Further, by partnering with fintech firms, BFSI can enhance client engagement by deploying AI-powered virtual assistants and automating tasks efficiently. In addition, access to cloud-based storage services enables BFSI to store and manage their data on a centralized platform and reduce the cost considerably. Furthermore, BFSI often outsources risk management services from fintech that allows them to pre-detect financial anomalies and prevent future financial loss.

Global BFSI Outsourcing Market Challenges:

Data security and privacy concerns can hamper the market growth for BFSI outsourcing. Since the BFSI sector deals with large volumes of confidential financial data on the cloud or online platforms of third-party service providers, there is a risk in managing data as it is prone to misuse, data breaches, and privacy leaks, which can damage the integrity of BFSI sector and reduce trust among its clients.

Furthermore, heavy dependency on third-party vendors can result in delayed services or operational issues on the part of the vendor and hence can reduce the demand for BFSI outsourcing in the market.

Global BFSI Outsourcing Market Opportunities:

The Global BFSI Outsourcing Market is anticipated to deliver lucrative opportunities for businesses, which include acquisitions, partnerships, collaborations, product launches, and agreements during the forecasted period. Furthermore, the trends in fintech and increasing demand for increased productivity and operational efficiency are predicted to develop the market for BFSI Outsourcing and enhance its future growth opportunities.

COVID-19 Impact on the Global BFSI Outsourcing Market:

The pandemic had a positive impact on the BFSI outsourcing market. Due to the lockdown, all the sectors worked from home, which contributed to the trends in remote working. With the increase in remote working during the pandemic, the BFSI sector resorted to outsourcing technical and other services from third-party vendors that ensured data security and improved the working productivity of banks and other financial institutions. These included increased demand for digital banking outsourcing services such as payment management, software and app upgradation, cybersecurity, customer support, and others. Furthermore, the rising demand for task automation increased the demand for AI-enabled BFSI services that reduced manual processing and enhanced overall efficiency during the pandemic.

BFSI OUTSOURCING MARKET REPORT COVERAGE:

Global BFSI Outsourcing Market Segmentation: By Outsourcing Service Type

• BPO (Business Process Outsourcing)

• KPO (Knowledge Process Outsourcing)

• IT Outsourcing

• Others

Based on market segmentation by outsourcing service type, BPO (Business Process Outsourcing) occupies the highest share of the market. BFSI outsources BPO services for providing faster services to its clients and improving operational efficiency. These include outsourcing non0core business activities such as customer support, which includes outsourcing call centers for handling client queries and resolving issues; data-entry and document processing, which includes outsourcing data entry tasks that ensure accurate and efficient handling of BFSI data such as client personal information, financial data, and others; outsourcing back office operations include repetitive administrative tasks such as record-keeping, transaction processing, and others. Furthermore, the emergence of AI has offered task automation services to BFSI, thus enhancing operational efficiency and productivity.

IT outsourcing is the fastest-growing segment during the forecast period. IT outsourcing refers to delegating technology operations to third-party vendors which includes app development, digital infrastructure management, cybersecurity, software maintenance, risk and fraud management, database management, and others. BFSI outsources these tech operations for increasing technological efficiency and provides a seamless financial experience to its clients.

Global BFSI Outsourcing Market Segmentation: By Enterprise Size

• Small and Medium-Sized Enterprises

• Large Enterprises

Based on market segmentation by enterprise size, large enterprises occupy the highest share of the market. Large enterprises in the BFSI sector include large financial firms, international banks, and multinational financial institutions that require outsourcing services for managing extensive business operations, these include outsourcing advanced tech operations such as payment processing, analytics, and predictive modeling to third-party service providers. Furthermore, these large enterprises often partner with fintech firms that offer them comprehensive outsourcing services, resulting in reduced cost and data management at a centralized platform. In addition, large BFSI companies require specific use cases outsourcing services such as anti-money laundering and business intelligence services that smoothen the financial process and enable them to make better decisions from data-driven insights.

Small and medium enterprises are the fastest-growing segment during the forecast period. These include small regional banks, community banks, insurance companies, small-finance banks, and others that outsource BFSI services from third-party vendors for data management and finance and accounting operations.

Global BFSI Outsourcing Market Segmentation: By Region

• North America

• Europe

• Asia Pacific

• Middle East and Africa

• South America

Based on market segmentation by region, North America occupies the highest share of the market. Due to established fintech companies and increasing demand for regulatory compliance, the demand for BFSI outsourcing has increased in the region. These include outsourcing payment processing and AI analytics services from fintech firms. Asia-Pacific is the fastest-growing region during the forecast period. Rapid technological transformation due to Western influence, emerging tech startups, and rising demand for task automation have boosted the demand for BFSI outsourcing in the region.

Global BFSI Outsourcing Market Key Players:

1. Accenture

2. Fusion BPO

3. Go4customer

4. Allsec Technologies

5. Firstsource

6. MattsenKumar

7. Finesse

8. Empaxis

9. Acquire BPO

10. Printmail Solutions