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Can India become the Coca Cola of the BPO sector?

Sometime in the current quarter, the number of direct employees in India's business process outsourcing (BPO) sector crossed one million, writes N Madhavan.

india Updated: Jun 13, 2010 22:59 IST

Sometime in the current quarter, the number of direct employees in India's business process outsourcing (BPO) sector crossed one million. You can add another 3.5 million jobs if you include indirect jobs for people such as caterers, infrastructure providers and taxi drivers for the industry, which only a decade ago was barely existent in the country. But the significance goes beyond some numbers, though everything matters in a way.

Last week, as the National Association of Software and Service Companies took stock of the industry at its annual BPO summit in Bangalore, it estimated 985,000 direct BPO jobs at the end of last March. With revenues at $14.7 billion dollars (nearly Rs. 70,000 crore), the industry now contributes 1.5 per cent to India’s incremental gross domestic product (GDP).

But what I want to emphasise today is the less visible aspects of the stock-taking, that signal a different kind of importance.

It turns out that India’s market share in worldwide BPO spending is as high as 34 per cent. Also, as much as 15 per cent of the business is in non-English work.

Now, the global statistic reflects the mindshare that India has commanded as “back-office to the world.” If you look at it hard, it seems that India is poised to become what I call the Coca Cola of the BPO business. Coke is an American brand, and only sells what some people would dismissively call sugared water (competing with fellow US brand Pepsi). But it is undeniable that it is an overarching global business with profits to match.

Coke is not just about the famous cola, but also drinks such as Fanta and coffee brand Georgia. Like Coke, India’s BPO industry has diversified beyond voice-based call centres to higher-end activities that involve industry-specific research work, and increasingly does “transformation outsourcing” — which adds management consulting work to BPO jobs to reap higher profits.

As for non-English work, the bulk of it, I suspect, comes from Indian languages, aided by the booming local telecom industry. But a small portion is from work in languages such as Spanish and Czech in Latin America and Eastern Europe, where Indian BPO companies now have a foothold, thanks to some pushing by multinational customers wanting to hive off work in a wholesome manner. Also, venture capitalists are funding global scale firms based on a vision of the changing world. I think these factors have created a new global management cadre in India’s BPO industry. Its test will lie in its ability to convert this into an appetite for global growth.

Often, people talk dismissively about the “low-end” call centre work done out of India. The fact is that such low-end jobs mean high-end aspirations for millions of people in India. At the other end lies high-end work and global management expertise.

The Indian BPO industry has the potential to smartly juggle both.

First Published: Jun 13, 2010 22:57 IST