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Moving towards a global future for BPO

More than 70 per cent of the revenues come predictably from the banking and insurance, manufacturing and telecommunication sectors, reports Ganesh Natrajan.
Hindustan Times | By Ganesh Natrajan
UPDATED ON APR 01, 2008 11:39 PM IST

The $50-billion opportunity for the business process outsourcing (BPO) industry that the NASSCOM-Everest study has revealed shows that India has established a fairly substantial lead over competing countries with a market share of 37 per cent ahead of Canada at 27 per cent and Philippines at 15 per cent. A clutch of other competing countries that include Ireland, Mexico and China have single digit market shares.

More than 70 per cent of the revenues come predictably from the banking and insurance, manufacturing and telecommunication sectors with industry players having established both industry or domain specific capabilities and the ability to transition widely-used processes to offshore destinations.

If the industry were to remain what it is today, it is predictable that after the low hanging fruit has been plucked and weak economic growth in key markets reduces the pace of offshore outsourcing, the growth rates would settle at the 30 per cent level for the next few years. The argument made in the study is that it will need a focus on new markets, new services and new ways of delivering the service for the growth rate to be accelerated to close to 50 percent which is needed to get close to the $50-billion dream.

New verticals like retail and media and the fast growing domestic call centre opportunity are already beginning to show significant growth.

The ability to offer Knowledge Process Outsourcing involving advanced skills and the addition of several processes in BPOs shows that this acceleration is feasible but it will need the creation and deployment of new talent pools to fuel this rapid growth. The huge gap of skilled entrants, the problem of inadequate middle management talent and the difficulty to train and retain talent for highly skilled process transition jobs can all put a spanner in the works and there is a need for both established educational institutions and new vocational skill building ventures to emerge and undertake major capacity building programmes in partnership with the industry. The interesting part is that this challenge is not unique to BPO; retail, hospitality, aviation and even the construction industry are looking for similar innovative solutions to keep the momentum going.

The BPO industry itself has the potential to transform the fortunes of individuals, communities and the country.

The study reveals that at stake are 2.5 per cent of India’s GDP and two million additional jobs with the normal expectation of creating three times as many jobs indirectly – which can change the employment scenario in the country substantially. The imperative to create an eco-system of support by the government, academia, security agencies and innovative entrepreneurial start-ups is there and the industry expectation that there will be a continuation of the tax benefits under the Software Technology Parks scheme is justified, given the competition from China, Vietnam and emerging Eastern and Central European destinations which are waiting for India to stumble to take on the mantle of BPO leadership.

The recent moves towards collaboration on best practices by BPO firms notwithstanding, it is going to need creativity, community and collaboration orientation by all the players to enable Indian BPO firms to stay ahead!

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