Security-major driver for BPO market

BANGALORE: Aside from traditional factors like cost savings, scale and scope of operations, one of the major driver in choosing the vendor among customers is security and compliance, said Pradeep Mukherjee, Managing Director, NeoIT at the Technology outsourcing conference at IT.COM.

"Market trends in BPO industry show that globalization has matured with outsourcing being seen as something irreversible. New markets and suppliers are emerging in countries like Eastern Europe, Philippines and China," he said.

Enlisting trends in the industry, he said that customers tend to factor in political risks like terrorism while choosing service providers. He also warned of other factors like the outsourcing controversy and the fact that project failures get plenty of publicity.

Mukherjee predicted that a BPO industry shakeout was imminent in India and that companies would move to newer destinations. He also projects that by 2008, BPO operations in secondary cities in India would compete with tier one cities and metros.

According to market forecasts, the offshore component of the BPO market is set to reach $19.8 billion in 2005 and $42.2 billion in 2008. The Indian market is set to grow to $19.8 billion by 2008. Dismissing the threat from China, he opined that as far as the BPO industry was concerned, it would take a while before China gained English language skills. "China is a bigger threat in IT services than BPO."

In the long haul BPO companies would need to provide a whole range of expertise than just the cost advantage or technology. "Companies should broaden their services to include business consulting, process execution and process expertise."

Though India thrives in customer care, sales and marketing, finance and accounting and back office processing, he felt that evolving segments like engineering R&D, credit and risk, underwriting, training, procurement and HR should be tapped, since these are growth markets.