BPO & The Indian Market

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Early history
The ITES-BPO industry in India is a relatively young and nascent sector, barely over five years old in this business segment. Despite its recent arrival on the Indian map to form a part of the export-oriented IT software and services environment, the industry has shown amazing growth and future potential.

What began as an activity confined to multinational companies, is today a broad based business platform backed by leading Indian IT software and services organizations and other third party providers.

According to NASSCOM, there are over 200 companies participating in the ITES-BPO segment and the numbers are growing every year.

The arrival of the MNCs
The early entrants—subsidiaries of foreign companies that were set up to cater to the process offshoring requirements of their parent companies—are currently in the phase of maturation and consolidation. Having successfully established operations in India and enabled their parent companies to achieve key bottom line benefits, these “captive,” wholly dedicated set ups including names such as American Express, British Airways and GE Capital, are in the stage of expansion. Most have moved from their single site status to multi-center locations. The majority have also scaled their operations—adding seats and capacity—to include more processes and customers.

Evolutionary path
The ITES-BPO market, which came into existence with the entry of the MNCs, expanded its base once Indian IT software and services companies, especially the ones with a strong base of outsourcing/offshoring experience and customers, stepped into the market. Today, these IT leaders are leveraging their existing strengths such as broad skill sets and global clientele, to create a portfolio of ITES-BPO offerings.

The market has gained additional players with the arrival of non-IT companies on ITES-BPO turf. A number of leading industrial groups in the country have set up ITES-BPO facilities with a view to participate in this emerging opportunity.

The ITES-BPO market today is characterized by the presence of companies such as Dell, HP, EXL, WNS, Sitel, HSBC, the Standard Chartered Bank, Convergys, Wipro Spectramind, AOL, Daksh, MsourcE, among others.

Broadening services spectrum
In terms of outsourced services too, the Indian market has witnessed a substantial evolution. The ITES-BPO market is segmented along the lines of customer care, finance, HR, payment services, administration and content development. ITES-BPO companies are offering customers a range of outsourced services including customer care, Web sales/marketing, billing services, database marketing, accounting, transaction document management, transcription, telesales/telemarketing, tax processing, HR hiring and biotech research.

Growth
The mantle of high momentum--a virtual prerogative of the IT software services industry in the years gone by--appears to have fallen on the shoulders of the country’s key ITES-BPO (Business Process Engineering) players. In the past 24 months alone, the ITES industry has recorded blazing growth, in excess of 50 percent. Even though it is on a smaller revenue base (as compared to the larger IT services market), the growth is a positive indication of the times to come.

The following facts point to the developments taking place in the ITES-BPO space:
  • During 2003-04, the ITES-BPO segment is estimated to have achieved a 54 percent growth in revenues as compared to the previous year.
  • ITES exports accounted for US$ 3.6 billion in revenues, up from US$ 2.5 billion in 2002-03.
  • The ITES-BPO segment also proved to be a major opportunity for job seekers, creating employment for around 74,400 additional personnel in India during 2003-04.
  • The number of Indians working for this sector jumped to 245,500 by March, 2004.
  • By the year 2008, the segment is expected to employ over 1.1 million Indians, according to studies conducted by NASSCOM and leading business Intelligence Company, McKinsey & Co. Market research shows that in terms of job creation, the ITES-BPO industry is growing at over 50 percent.

Existing markets
The global size of the ITES-BPO market, according to recent market studies by International Data Corporation (IDC) have shown that the segment was worth US$ 773 billion during 2002. The Americas (US, Canada and Latin America) continued to dominate the market, with a share of 62 percent during 2001 followed by Western Europe and the rest of the world and the Asia Pacific region.

According to IDC, worldwide ITES-BPO spending will expand at a CAGR of nine percent during the 2002-06 phases.

Source: Nasscom.in

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