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BPO- between the devil & the deep sea?

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CIOL Bureau
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BANGALORE: Is consolidation the only way for the BPO industry to carry on its successful march forward? This moot question elicited wide and varied reactions from the line up of BPO players at the second annual Nasscom ITES-BPO Strategy summit in Bangalore today.



Rather than terming the trend as consolidation, most players felt that the industry is in the concentration phase. Raman Roy, Wipro Spectramind’s Chiarman and MD, felt that companies go in for acquisitions to scale up by completing their portfolio of services in order to get better access to markets.



At the same time, he said, that it did not mean that the market was closed for smaller, fragmented players. "There’s a huge market sitting here. This year India’s earning from BPO-ITES is $3.6 billion, which is just 2 percent of the world market. So the scope is mammoth-sized," he said.



According to James Hale, Managing Partner of FTV Management company, the hot sectors for the BPO industry are transactional processing, finance and administration.



A hotly debated issue at the summit cutting across all discussions was the cut-throat competition that was leading to enormous price pressures for BPO companies. Most participants felt that this would continue for sometime since the industry, which is barely 4 years old is still in its nascent stage.



One of the other growing pains that the industry faces is the challenge of balancing between low cost and having financial stability.



Speaking from the own experience of his company Spectramind getting acquired by Wipro, Raman Roy said that the upshot was the boost in terms of branding, capital access and quality, while the relative disadvantages included the inability to make independent decisions and following company norms.



Though scaling up is a key factor, the risks associated with consolidation are high, said Ananda Mukherjee, CEO and MD, ICICIOneSource. He added that since the industry is growing fast, access to capital is not an issue for major players.



Commenting on the outsourcing backlash in the West, Edward Males, MD of Broadview International, said that the debate would go on till the US elections since it’s a political "hot potato".>



He stressed that the more important issue for India is to correct the general US perception that BPO in India consists of just call centers. "Some re-education is needed on this," he said.



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