BPOs explore uncharted territories for growth

NEW DELHI: Market perception today has undergone a significant shift with outsourcing being increasingly seen as a technique for strong companies to improve competitive positions from considering it merely as a means for companies to meet short-term financial objectives.

According to Nasscom, the offshore IT and BPO industries are expected to grow at a CAGR of 28 per cent over the next five years, with IT growing at 25 per cent CAGR and BPO at 37 per cent.

With BPO companies mushrooming in the country and India slowly losing its cost advantage, it is time for the industry to look at tapping newer economies and newer industry segments for growth.

A Nasscom-McKinsey report has stressed on specialized BPOs as one of the four possible winning approaches for the next five years. These could be platform-based service providers, process automation and process reengineering companies and vertical contractors.

The need today is to understand the domain. Knowledge is an essential component of any BPO -- not only of a KPO -- and domain knowledge is essential for companies to compete.

Many a BPO services provider has already started looking at this direction. Genpact is tapping new verticals like healthcare and media. The company's operations are geared more towards knowledge-based functions and 60 per cent of its business is from knowledge processes.

Genpact senior vice-president and business leader Mohit Thukral said, “BPOs should focus on industries that are growing. Cost reduction is already given. They should work at creating value and value enhancements such as increasing their wallet size. We have started doing work on the media side, which we consider a great opportunity and have recently signed a JV with NDTV in this regard.”

Hospital management is another area, which Genpact considers hot. Thukral added, “In this space, HM software is there, consulting companies are also there, but this area is largely untapped by the BPO companies. So opportunity exists for BPO companies to do back office. Cost of healthcare is increasing in India and the US with the rise in mortality. BPO companies can take over the entire back office of a hospital and do entire HM in that space.”

Risk management is yet another area where BPO firms can look at. They could provide services like controlling and managing client risk and ensuring that the end customers are comfortable. Collapsing of BPO and ITO is also taking place. BPOs can create value for customers by integrating these functions.

Yet another area with growth potential is finance and accounting (F&A) deals, where customers look at technology side to do the integration. This is more of a value enhancer than being cost driven.

Keane is basically an IT company but is also a managing consultant plus a BPO. It provides transformation solutions through which companies can decrease cost and increase revenue.

One of the emerging spaces that the company is betting on is sales enablement outsourcing (SEO). Keane vice-president, Business Operations Harsh Vinayak said, “This space has been touched in parts. A combination of graphics and research could act as a value proposition for companies. For this knowledge of the IT industry is very important.”

Salient Business Solutions, a joint venture between the Thapar Group of India and US-based healthcare company Option Care, is also betting on the healthcare market.

According to Manoj Malhotra, Salient BPO CEO, “Healthcare is a $3.5 billion market in the US. This sector in the US is disorganized and haphazard in the use of technology. We have identified sectors, clients and processes that we plan to tap for growth in this segment.”

Data explosion is also expected to lead to opportunities in the BPO space. Analytics is the ability to manipulate large amount of company's data in a very sophisticated manner. As data explosion is taking place, crunching of data and problem solving could be a big opportunity.

Another area to look at is data mining. Opportunities are there in this market but time of market, developing skills and talent are challenges that have to be overcome before tapping this market.

InfoVision Group (IVG) independent IT enabled services companies in India with a focus on providing Customer Centric Process Outsourcing (CPO). It is betting on the CRM market for growth. IVG senior VP Deepak Malik said, “The outsourcing CRM opportunity in B2B services is around $40 billion. Crunching data for things like frequent flier, dining card, etc. presents a big opportunity for growth.”

Legal process outsourcing (LPO) is also an upcoming space in the BPO arena. According to a study by the US-based Forester Research, the current annual value of legal outsourcing, which is worth $80 million can rise up to $4 billion and can fetch 79,000 jobs in India by 2015.

Inductis offers high-level data mining services to assist management decisions that affect the bottom line. Inductis India vice-president, Lalit Wangikar said, “We haven't yet crossed the basic threshold in LPO. Genpact does some work in this year, but paralegal support is a challenge. To succeed in this field, we have to understand laws and compliances in the US. BPOs would also need to know the nuances of a country's legal system in that domain.”