Global BPO industry to be $230-bn in 2012

MUMBAI, INDIA: The global BPO industry will be worth $230 billion by 2012 and India stands to gain $50 billion of that global pie.

However, the country’s existing infrastructure needs a complete re-haul; workforce needs to be upgraded and there is a need for a paradigm shift in focus to tap this huge opportunity.

Currently, the global BPO market is estimated at $26-29 billion and has grown at 35 per cent over last few years.

"These are exciting and challenging times for the Indian BPO to leverage its advantages and firm its grip on the Global BPO industry," says Peter Bendor-Samuel, chief executive officer, Everest Group & Outsourcing Center.

Everest Group, in association with Nasscom, has prepared a report - ‘Road Map: Capitalizing on the expanding BPO landscape’ - which is an in-depth analysis on the global BPO landscape with focus on Indian BPO industry.

"Our bottom up analysis shows a total export BPO market opportunity of $220-280 billion and Indian BPO industry can target $50 billion in export revenues by 2012," said Bendor-Samuel.

The banking, capital insurance and manufacturing verticals will constitute 70 per cent ($160 -190 billion) of this global BPO market.

Technology, telecom and travel industry verticals ($10 billion) will also be big markets, explains Bendor-Samuel. He adds that the BPO growth will provide job opportunity to two million graduates in the country.

Currently 0.7 million graduates are employed by the industry, which at present garners $11 billion in revenues. India, says the Everest CEO, has an advantage over other countries to achieve this target.

"The achievements to date of the Indian BPO industry are impressive. Having grown manifold in size and matured in terms of service, delivery capability and footprint over the next decade, India has a significant headroom in the addressable BPO opportunity for the buyers and providers," says Bendor-Samuel.

However, the country has to rethink its strategy to tap this bludgeoning market and ward off the competitive threat from other countries, he adds.

"The talent side is seriously short. The future growth of the Indian BPO industry will put significant constraints on the supply side. From a people perspective capturing a fivefold growth will put pressure on talent availability at all levels', says Bendor-Samuel.

Unless the focus on 'ready to eat' talent is altered, the future growth may lead to a shortage of 8 to 12 million entry-level graduates by 2012, adds Bendor-Samuel.

He warns the country to seriously consider threat from countries like Philippines and China who are breathing down India's neck to grab this opportunity.

"While India is best equipped is to capitalize on the available opportunities. Efforts should be made to see to it that these opportunities are not lost to other offshore destinations. A number of offshore/nearshore BPO destinations are emerging as viable options for the BPO delivery centers, Philippines, Eastern Europe, Latin America and China could pose threat to India's dominance," he says.

These locations also offer lower cost services, provide sizable talents and offer valuable leverage points to the buyers, adds Bendor-Samuel.

Philippines, though started late in the BPO industry, today has 0.3 million BPO professionals. He says, going forward, the industry needs to think differently to garner new markets.

"Buyers’ expectation are changing and companies need to be able to deliver more at a less cost arbitrage."

He adds that the reliance on cost savings-driven value proposition alone will not be in the best long-term interest of the BPO industry.

"As providers step up, the arbitrage-centric, subscale operations will come under pressure. Players will need to invest in highly specials offerings or diversify to build scale."

Bendor-Samuel says third party vendors need to change focus and aim to become global leaders. "They need to have a diversified BPO layer and be a segment specialist"

He has same words of wisdom for captives and providers, "While captives have to drive excellence, drive innovation and a low cost aggregator, providers need to diversify their footprint within India to drive through creative and innovative operating models.”

"Our analysis shows that providers can reduce the total operating cost by 25-30 percent by moving to low-cost city within India. By doing so the industry can effectively tap labor pools in several states across India," he says.

He also puts onus on the government to help industry achieve these figures.

"Government and industry should collaborate to facilitate creation of BPO hubs in tier-2/3 cities in India. These hubs should have international connectivity, mass transport system, telecom connectively, healthcare, shopping, education and security infrastructure", says Bendor-Samuel.

The Everest CEO also argues for a change in existing education curriculum so it in line with Industry needs.

(idhriesa@cybermedia.co.in)