PUNE: Notwithstanding the hype about new niches, more than three-fourths of the 50 leading players in industry offer call center services. Over the years, the range of services offered by outsourcing service providers has witnessed a continuous shift.

According to a research conducted by ValueNotes Database, interestingly, even as the competition intensifies, diversification seems to be more popular than focus - partly a result of low value service providers scrambling to add better paying services. BPOs are gravitating towards high end, knowledge process outsourcing services (KPO) such as equity research, financial data mining, market research, publishing, e learning and the legal industry.

The research also reveals that financial services is still the largest customer segment. ValueNotes analyzed some of the key players and interesting trends in mergers and acquisitions and found that many leading BPOs are confused in choosing between focus and diversification. The study states that financial services vertical accounts for over 40 percent of Indian BPO revenues. NASSCOM had pegged the financial services market at $ 820 million in the year 2003-04 with a growth of 70 percent.

The ValueNotes sample found that more than three-fourths of BPOs offered services to the financial services industry. More than half also cater to the insurance and banking vertical. BPOs catering to the financial services primarily comprised of transaction processing and product administration service.

As of FY2004, the ITES-BPO industry in India employed close to 250,000 people, of which captives employed 60 percent. The 50 BPO companies covered in the survey employ over 80 percent of the total resources.

NASSCOM estimates total Indian BPO revenues to be $ 3.6 billion for FY 04, of which third party BPOs account for 40 percent, or $ 1.44 billion. The 50 players accounted for close to $ one billion in revenues in 2004. There are very few players earning more than $ 80 million per annum and interestingly, they fall into the category of providers, offering multiple services. Players with higher revenues typically tend have a larger scale of operations and wider service offerings.

The sudden increase in the number of players in this sector has led to the debate whether the BPO boom would frizzle off like the dotcom industry or manage to keep revenues flowing like the Indian IT industry. The report stated that to survive in the industry, every BOI vendor, big or small, needed to develop and work on strategy. ValueNotes felt there would be few large BPOs with adequate capital and the ability to scale, who would survive and successfully position themselves as one-stop shops. The niche players on the other hand, need to position themselves as among the best in a specific area of expertise.

The study predicted that new businesses, newer markets, wider geographical reach and new niche segments would drive the M&As in this industry. A number of small and medium players were on shaky ground due to lack of focus and strategy. According to ValueNotes, KPO would emerge as the new sunrise sector with revenues expected to reach $ 17 billion by 2010.