Despite a volatile global economic climate in 2009 and gradual economical recovery in 2020, the Indian BPO industry held its head up, continued to take centre stage in global sourcing strategies, and maintained its position as a strategic offshoring destination. Efficiencies gained during the economic crisis were not lost and the industry continued to re-engineer internally. Overall, the BPO segment remained a net hirer, continuing to create employment opportunities.
BPO spend witnessed a recovery during 2009-10, growing at 4 per cent. Revenues from BPO services rose to USD 158 billion in 2010. The industry was driven by traditional and developing markets, the emergence and adoption of new technologies, new business models and new customer segments.
Verticals such as BFSI continued their upward spiral, scaling IT spending by 15 per cent in 2009-10, and adopting IT rapidly. In the same period, the healthcare segment, though small, grew at 6.6 per cent. With new regulations making it mandatory that US healthcare providers use electronic health records and adhere to strict data coding standards, hospitals began investing in IT upgrades. The trend is expected to continue, with the healthcare industry estimated to spend billions of dollars over the next decade on IT. government also remained one of the largest adopters of IT, with a share of 12.1 per cent during the year.
Change too was the norm for the Indian BPO industry. The sector aligned itself to altering customer expectations and their dynamic requirements. With BPO spend impacted by the global economic slowdown, customers began looking at getting the highest Return on Investment (RoI) out of every BPO engagement, through the extensive use of diligence and intense negotiation of contracts.
In 2010-11, as the global economic tide began to reverse, Indian BPO organisations announced transformative initiatives, including industry-specific BPO solutions and platform BPO offerings, to differentiate themselves.
Transformation has in fact become the new theme for the global sourcing industry. Transformation is about change and not repeating or replicating today’s issues, but doing things differently, and eliminating activities that do not add value. Transformative service delivery is business focused, aimed at delivering confidence and managing risks, using modern business realignment, delivering higher performance and economies of scale, at the same time, enabling sustained savings and value.
During 2010-11, the Indian BPO sector also focused on value-based Mergers and Acquisitions (M&As), purchasing small niche and regional players, to fill gaps in their current offerings, and extend market reach. Though at a nascent stage, some components of BPO delivery also moved to the Cloud.
The global financial crisis over the last three years saw the BPO landscape change. IT-BPO synergy, process re-engineering and transformation, and global delivery all became hygiene requirements.
Abid Ali Neemuchwala
Vice President (Public Co.,
IT & Services Industry),
The industry remained committed to achieving excellence in business process management. Additionally, it focused on growing higher-end knowledge services, that delivered significant intellectual arbitrage. The result was that the BPO sector generated USD 14.1 billion in export revenues in 2010-11, growing at 14 per cent over the previous year. The industry employed close to 835,000 people in 2011. It accounted for over 34 per cent of the worldwide BPO market, thus becoming the largest global destination for BPO services delivery.
In the new decade, the industry is expected to build on its existing phase of evolution — BPO 3.0, which is characterised by greater breadth and depth of services; process re-engineering across the value chain; increased delivery of analytics and knowledge services across platforms and strong domestic market focus and SMB-centric delivery models.
According to studies by NASSCOM, IDC and the Everest Group, the domestic BPO segment is expected to grow by 16.9 per cent in FY2011, to reach USD 127 billion. It will be driven by demand for voice-based services, in addition to adoption from emerging verticals, new vertical segments and value-based transformation outsourcing platforms.
Over the last year, a number of leading BPO organisations in India have witnessed a change of leadership? Is this reflective of the other transformations taking place in the BPO landscape?
BPO in India is really an evolution of three schools of thought. There were quite a few people who capitalised on the rapidly scaling customer interaction voice business, only to falter as the business became more and more commoditised and price pressures actually created situations where recruiting qualified personnel became a challenge. People soon realised that the voice business was moving out with the same speed as it was moving in. Some other organisations focused on horizontals such as F&A and HR, and built a more sustainable model though they still primarily continued to focus on wage and labour savings in their processing.
The global financial crisis over the last three years saw the BPO landscape change. IT-BPO synergy, process re-engineering and transformation, and global delivery all became hygiene requirements. Increasingly, there has been a demand to drive business effectiveness through BPO and to support revenue generation and growth.
This evolution of the industry has also seen a newer generation of leadership taking charge and driving the internal change to align organisations to these new market realities.
How are you viewing the changes taking place in the BPO environment? What do they spell for the industry?
The changes taking place in the BPO environment are the result of the dynamic external environment coupled with changing customer expectations. The global slowdown has meant changes such as:
- Scarcity of capital, leading to expectations of faster RoI on all the investments (short/long-term)
- Demand moving from established markets to emerging markets
- Evolving regulatory norms and increasingly stringent compliance, requiring additional investments
- Increasing cost of new customer acquisition and the consequent focus on customer retention/cross-sell as the key to revenue growth
Organisations have been compelled to become more agile and responsive, and are demanding from the providers an ability to:
- Address the emerging markets with minimal investments
- Generate consumer insights and provide business decision support
- Leverage the 'social web' to gauge sentiment and service the markets