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Domestic focus pays off for many BPO firms
A ship’s journey is complete when it returns home. Having sailed through the Americas, Europe and some parts of Asia-Pacific, Indian BPO companies in recent years have been heading home to dock their businesses.
What is important is that seat utilisation is higher. For many, the day shift is dedicated to domestic business while night shifts are for overseas business. To maintain margins, employees working on domestic business are paid at least 20 per cent lower than those servicing foreign clients. This is because domestic recruits do not undergo the same technical, domain, socio-cultural and accent training as recruits for foreign business. Employee wages form 45- 60 per cent of BPO company revenues and the lower the cost, the higher the profitability margins.
Mr Prabhakaran of 3i Infotech says his employees are paid only marginally higher wages for servicing foreign clients. The company is able to achieve comparable margins from domestic and international businesses because of robust in-house technological platform and well structured processes. This, industry players say, will become the key to grow a successful domestic business and achieve an optimum revenue mix of 40(domestic): 60 (international). Developing proprietary technology and systems that can be customised for clients and innovative delivery mechanisms will help companies make the most of their buck in India.
Growth projections
According to Nasscom, the domestic BPO market has grown at CAGR (compounded annual growth rate) of 50 per cent from $200 million in 2003 to $1.6 billion currently. In 2012, the industry will be $15-20 billion strong.
Entry level salaries for domestic BPOs range between Rs 6,500 and Rs 8,000 a month and have been growing at a CAGR of 10 per cent annually for the last four years.
The total number of professionals in the domestic IT and BPO industry was 2.85 lakh in 2002 - 2003 and it has now grown to 4.27 lakh.
