Business Process Outsourcing (BPO) is slowing in the Asia Pacific with HR (human resources) making up the bulk of the market.
Payroll services, benefits administration and training and development are the most common HR activities outsourced in the region, according to Gartner.
The Asia Pacific (excluding Japan) HR BPO market is expected to reach $US1.3 billion in 2006, representing 24.7 percent of the total BPO market and an increase of 9 percent from $US1.2 billion in 2005.
The overall BPO market in Asia Pacific is expected to reach $US5.4 billion in 2006, an increase of 13.5 percent over 2005.
Australia experienced growth rates higher than the Asia Pacific average for HR BPO, at 10 percent from 2005 to 2006.
The total BPO market in Australia will expand from $A779 million in 2005 to $A855 million in 2006.
Gartner research director TJ Singh, said the challenge in this region is to find a service provider that can provide comprehensive HR BPO across their existing footprint.
"Australian and New Zealand customers are second or third generation HR BPO users who are more likely to move towards more 'comprehensive' engagements," he said.
Singh says fear of losing control is a major obstacle to BPO adoption.
"There is also the fear that, once a process is outsourced, it will be difficult to transfer it back if needed," he said.
"Gartner recommends organisations carefully weigh up strategies that displace internal functions and staff."