Business process outsourcing bolsters Accenture

A silver lining for Accenture amid a weak IT spending environment has been strong growth in the so-called business process outsourcing (BPO) market, in which companies offload to a third party management of business functions such as accounts payable or human resources.

While consulting sales at the management consulting firm dipped 10 percent for the fiscal year that ended Aug. 31, BPO revenue doubled to US$1.44 billion, said company executives at a media briefing in New York yesterday.

And while the company isn't looking to grow by combining forces with a tech giant, as PricewaterhouseCoopers did with IBM last year, Accenture is "continuing to look at BPO (acquisition) opportunities" where it makes sense to expand, said Chairman and CEO Joe Forehand.

Accenture first entered the BPO space in 1991, when it took over discrete accounting operations for British Petroleum and Northwest Airlines. The company now has eight BPO divisions, including finance, human resources and business services for utilities -- and it's continuing to branch out.

For instance, Accenture recently began providing life insurance policy management services for a customer in France and is now looking to expand those services to insurers in Europe, the U.S. and other parts of the world, said Joel Friedman, chief operating officer for Accenture's BPO business.

BPO has continued to be a growth market during the economic downturn and is expected to expand from an $860 billion business today to one worth $1.2 trillion in 2006, according to market research firm IDC. Some of Accenture's BPO customers include AT&T, ConocoPhillips and the U.S. Department of Defense.

Friedman declined to speculate on what other BPO areas Accenture might explore. "But this market is growing 30 percent to 50 percent each year, and we expect to grab our fair share of that," he said.

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