Experts bullish on BPO industry, see huge opportunities

Over the last ten years, the Indian BPO industry has grown to achieve a scale of more than USD 12 billion in revenues. Presently, worth nearly USD 150 billion, the industry employs over 400,000 people. The BPO industry of India is expected to undergo many minute changes. It is to take note of these fine points the BPO India Forum was organised in New Delhi and Mumbai recently.

Noshir Kaka, Director and Global Leader Outsourcing and Offshoring Practice, McKinsey & Co says, “I continue to be very bullish for this industry globally and for India. Globally, the opportunity is USD 1.5 trillion. We have only done between a USD 160-170 billion globally in low cost countries today. So, we have done less than 10% penetration. So, what I see is the huge opportunity ahead. India currently has a 45% market share give or take and it's by far the dominant country. However, that dominance is for us to lose. We have actually a massive talent problem. We continue to see huge attrition at sites in India. We see Philippines becoming much more interesting for voice base activities. It's only a matter of time when other countries actually come back up on stream with their talent programmes. So, we are in the lead, we have a massive opportunity, but it is for us to lose.”

Also read: Tech Mahindra to set up BPO operations in Philippines

Deepak Patel, CEO, Aditya Birla Minacs Worldwide Ltd says, “Certainly, the business opportunity is significantly large. So, the key things that come to mind is focus on domain expertise, build really deep capabilities and acquiring capabilities from the industry that you are going to be focused on. And then we are going to bring IT, BPO, technology, infrastructure all completely integrated, bundles solutions is what our customers are looking for. The customers are looking for more accelerated value creation. So, we have to innovate much faster, bring these things to bell on an integrated fashion.”

The Indian BPO industry has well weathered the global economic meltdown. The key challenge ahead of it now is to keep up with the competition being posed by new countries that are emerging as outsourcing hubs and at the same time remain cost competitive. In that order, the next five years are going to be the most crucial for the industry in India.

Vikram Talwar, Executive Chairman, EXL Services says, “In one very simple sentence the future is very bright. There is a huge opportunity. India offers capability that probably no other country in the world does. Huge population, highly educated. The question then becomes what is the impact of growing cost. Yes, there are growing costs. But at the same time we are moving so far up the value chain that the price that we charge for the services that we are now offering is much greater than it was before. Also, the kind of services we now perform provide us with a revenue per employee much greater than it was in the past. So, while costs are going up, I think we can mitigate that by the kind of quality of services and the skills that require for those quality of services.”

The opportunity of the BPO industry is on a rise with the growth and opportunity in emerging economies expected to present over USD 300 billion worth of business opportunity.

On the supply side, factors like increasing competition from low cost countries, shortage of talent, need for new business models are likely to affect the industry significantly. It is therefore imperative for BPO customers and providers to understand the impact of these factors and transform their approach in business models accordingly.

D Swaminathan, CEO and MD, Infosys BPO says, “The BPO industry being various synonymous of the voice kind of processes. Therefore, you had these young graduates coming out of college, straightaway are signing up with the BPO company and doing a whole series of voice processes. Two years down the road, they are trying to understand is it what they want to do for rest of their life. A whole lot of them really don’t want to do that for rest of their lives because these are guys who have done their basic education, graduation and issues like finance and accounting, engineering and all of that stuff. So, clearly if they were to look at their longer term career, the only option was to sort of move out of the industry and do something different. But obviously the BPO industry has moved on. It’s no more transactional in that sense, it is no more just about voice processes. It has got into transformational stuff, it’s got into non-voice processes. Infosys BPO, for instance, today, 94 clients that we have are across multiple engagements, verticals, whether it be telecom space, whether it be in the banking space or in the insurance space, retail. So, we are pretty much working with global marquee key clients across many different verticals.”

Jangoo Dalal, President, Avaya India says, “In the past, if you wanted to set up in a particular geography, you needed a minimum amount of mass of people, to enable, to get their technology going. But today with virtualisation, you don’t really need that. What you can do is you can have centralised could based services and start from any amount of people and keep scaling up. So, I think in that sense this is one example of virtulisation is going to help our Indian BPO industry move closer to the customers at better cost to themselves and better cost advantages to their customers.

The event at Delhi and Mumbai brought to the fore some significant industry trends. Some of them being traditional offshore clients like banks and telecom companies are looking to expand their offshore foot-print. The total addressable opportunity from the core markets is expected to be USD 220 billion. New and untapped sectors like public sector, healthcare and new segments such as small and medium businesses present equally large opportunity of about USD 150 billion. New and traditional onshore clients who uptill now were looking for labour arbitrator savings and quality are now looking for higher order benefits like high productivity form offshore operations, support in revenue growth and shorter ramp up.

Kumar R. Parakala, COO, Advisory Head, IT Advisory says, “BPO industry needs to become very innovative now, particularly what has happened in the last two years due to the global financial crisis. Innovative solutions are very much required by their clients and they need to innovate to remain sustainable in their business. Technology no doubt remains one of the major drivers that enables businesses worldwide. So, BPO industry has a role to play in increasing the value for their clients and decreasing cost.”

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