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India to remain the BPO Capital of the World

India has recently lost its pre-eminent position as the world’s ‘call centre capital’ to Philippines which now has more number of people than in India answering calls from international customers of global companies.

But this is one leadership position Indian BPO (business process outsourcing) industry was happy to give in. The reason is simple: ‘voice’ or call centre jobs are at the lowest end of the BPO value chain and India, thanks to its early entry into the BPO segment, is growing non-voice businesses so fast that voice is quickly losing its share.

In the estimated, $16 billion export earnings of the Indian BPO industry in 2011-12, 12 per cent higher than the previous financial year, voice or customer interaction service (CIS) accounted for 42 per cent. Yes, CIS is still the largest chunk of the revenue but its share in the total has dropped significantly from more than 60 per cent of the BPO pie just about seven years ago.

While the share of voice is dropping in the total BPO exports revenue, the higher value added services are growing for India. According to the latest Nasscom report, Nasscom Strategic Review 2012, Finance and Accounting accounted for 22 per cent share, Knowledge services 18 per cent and Vertical-specific BPO 14 per cent. Other segments, currently small but growing fast, are HR outsourcing, Procurement & Logistics and Legal Process outsourcing, etc.

While the initial BPO impact was tactical in nature, over the years, with improving service delivery and domain capabilities, Indian BPO firms have been able to make significant strategic impact on client business, pointed out a Nasscom report.

Just how important is this transformation? Nassscom estimated that Indian firms’ transformative services leveraging benchmarking information, domain knowledge and business insights driven by analytics is adding incremental value to their clients to the tune of 10 to 100 times as opposed to only 0.5 to 2 times in the initial years of the industry. Nasscom estimated that the Indian BPO industry directly generated 880,000 jobs in 2011-12 and provided indirect employment to over 3.5 million people.

Says Pramod Bhasin, Vice-Chairman of Genpact and considered as the ‘Father of Indian BPO’, “Slowly the distinctions among the various types of BPO services are blurring. Increasingly, companies are asking for complete solutions based on versatile platforms. I am happy to note that the Indian companies are moving towards this paradigm shift.”

Offer as a package

If India is able to spot the diversified and more value-added opportunities in the BPO services quicker than any other country, it is mainly because of its strong number one position in the global IT services outsourcing business. Though started late, the Indian integrated players, those who offer software and BPO solutions, now account for a third of the BPO exports. While the pure-play BPO vendors account for around 25-30 per cent of exports revenue, the 100 odd global in-house centres account for another 21 to 23 per cent.

As the Indian BPO players are helping their customers in transformational growth, there are three clear trends that stand out. “With the customers demanding that service providers share their business risks, organisations have begun to increase their verticalised service offerings,” said the Nassom report. Responding to the change, Indian BPO service providers are aiming to provide services across the entire value chain within particular verticals by developing domain specialisation.

Since delivering customised verticalised services to customers needs a thorough understanding of their products and entire business ecosystem, Indian BPO service providers are increasingly setting up centres near to or in customers’ geographic locations. Such “onshoring and near-shoring activities and local hiring trends”, are going to get further momentum in the future, predicted Infosys executive Co-Chairman Kris Gopalakrishnan.

Yet another new trend is the focus on non-linear growth, using a variety of tools to get higher revenue (and margins) with smaller incremental hiring. Clearly, Indian BPO is on a drive far ahead of any other country in terms of service superiority and value addition to customers. As long as Indian BPO firms work as close-knit partners in this journey, it will remain the world BPO leader. As Bhasin predicts, “As the ‘labour arbitrage’ will vanish in a decade, it is time for us to completely re-orient ourselves to the tectonic shift.”

Via: Deccan Herald

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