Indian BPO

The Indian BPO industry is at an interesting juncture of its history. After recording mind-boggling growth of nearly 37 per cent YoY for the last six years, the sector is faced with a dynamic and volatile global scenario, which is throwing up significant challenges. As the markets, where the industry predominantly plays are changing, and as customer needs are altering, the BPO industry needs to reinvent itself in order to sustain its global leadership.

Clearly, the going has been good so far. BPO industry revenues have risen to USD 14.7 billion in 2009, up from USD 1.6 billion in 2002, making it the fastest growing among all other Indian industries and giving it a 51 per cent share of the global outsourced industry.

At the same time, the debilitating impact of the economic slowdown sweeping across the world cannot be ignored by the BPO industry which predominantly relies on exports.

Matters are made worse by the fact that the Indian BPO industry banks significantly on the US market (with 59 per cent of the sector’s revenues being realised from this geography) as well as the Banking, Financial Services and Insurance (BFSI) vertical (which accounts for 50 per cent of BPO exports), as both these areas have been massively hit by the economic slowdown.

The current crisis has also led to a complete change in the way global customers are now approaching outsourcing. A recent NASSCOM-Everest Research Report shows that the outsourcing needs of buyers are changing with companies focusing on value drivers (lower prices, smaller-sized projects, savings and speedy implementation); minimising risks; re-evaluating the sourcing model (re-thinking captive versus supplier mix, evolving risk-reward relationships with vendors and opting for outcome-based pricing) and examining whether they ought to outsource work currently done in-house owning to sentiments on lay-offs.