Profits and profitability

In 2018, the outsourcing industry registered its record high net profit for the period 2014-2018. Moreover, after two years of decline, in 2018 the profit jumped by 57.4% y/y to EUR 174.3 mln. The growth was fuelled by the performance of the BPO sector where the net profit reached EUR 107.0 mln, compared to EUR 61.3 mln in 2017. The ITO sector also performed well,raising its net profit by 36.1% to EUR 67.3 mln. The results of BPO’s segments continued to be mixed – half of them enjoyed improved profits, while the other half saw a decline in profitability. VBPO came on top in terms of net profit increase, as it did in terms of annual growth in operating revenue. FAO was on the other end with its net profit slumping by 62.0%.

The bulk or 76.0% of the sourcing companies with financial results for 2018 reported net profits in the year under review.

The share of the companies in the red was 18.3% and the remaining 5.7% posted neither a profit nor a loss. The large share of profitable companies and the uptrend in the sourcing industry’s net profit improved its net profit margin to 7.3% in 2018 from 5.5% in 2017. The profitability of companies established in 2016-2018 was higher than the industry’s average – 10.7%.

In 2018, the sharp rise in profit brought the sourcing industry’s average net income per FTE to EUR 2,618 – an annual jump of 44.0%. It was the third-highest average net profit per FTE in the 2014-2018 period, with the bottom being EUR 1,818 – registered in 2017. Following the jump in VBPO’s net profit, its net income per FTE was the highest among the sourcing sectors and segments, at EUR 3,770. It was by 14.3% greater than the value of the second in the ranking – ITO with EUR 3,298.