According to a recently released IDC and Financial Insights study, financial institutions are increasingly looking to third parties to manage entire payment functions, rather than the process alone. IDC estimates that U.S. spending on payments BPO services reached $3.3 billion in 2005 and will grow at a five-year compound annual growth rate (CAGR) of 4.2 percent to reach $4 billion by 2010. This increasing trend of payments outsourcing presents new opportunities and challenges for financial institutions and payments processing vendors.

"Financial services institutions have been pioneering adopters of the BPO model. Payments outsourcing, an increasingly visible and gaining segment of the global business process outsourcing market, is the latest reflection of this industry's comfort with outsourced business processes," said Shruti Yadav, analyst, BPO Services at IDC. "IDC observes healthy growth in deal activity and market spending accompanied by a shift from back office to strategic objectives and deal drivers."

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