While the offshore (international) BPO market faces pressures with economy-wide slowdown in developed markets, the domestic BPO market is getting ready to take off. According to Arun Jethmalani, CEO, ValueNotes, “Unlike the overseas business, labor or cost arbitrage does not drive the domestic BPO market. It’s strategic factors such as the need to scale rapidly, focus on core competencies, enhanced productivity and reduced time to market that are driving domestic demand”.
ValueNotes’ research indicates that the domestic BPO industry stands at an inflection point, with the growing scale of Indian buyers as well as the emergence of significant vendors with greater capabilities. The recently released report by ValueNotes estimates the share of third party revenues is 27% of the domestic BPO market, at Rs. 18 billion for FY08. This is expected to grow at a CAGR of 44% over the next four years reach Rs. 77 billion by FY12.
According to Neeraja Kandala, analyst and co-author of the report, “The outsourcing opportunity in the domestic BPO market will gain impetus over the next couple of years with the increased buyer awareness and adoption of outsourcing across industry verticals. Reforms in banking, financial services and insurance will further drive the future growth.”
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International leaders (established BPO service providers with strong presence in international BPO market like MphasiS)
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India leaders (primarily focused on domestic market like Aegis, InfoVision and Omnia BPO)
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Emerging companies (companies building capabilities and currently offering specialized services on a small scale like Caretel, vCustomer)
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‘Me-too’ players (offering undifferentiated low value services)
In the absence of cost arbitrage, creating sustained value from outsourcing will be a critical challenge for service providers in the long term. Currently, services outsourced by the Indian companies are largely limited to high volume, back office jobs and customer support activities. Pranav Dixit, analyst and co-author of the report says, “Most of the Indian companies are outsourcing for the first time. Further growth in outsourcing volumes will be largely dependent on performance of initial engagements and will unleash opportunities higher up the value chain.”
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Indian companies looking to outsource their services
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Existing service providers to assess the competitive environment in domestic BPO market
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Other potential service providers to assess opportunities across various industries
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Venture capital companies looking for investment opportunities in specialized domestic BPOs
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Researchers looking for information on domestic BPO industry
