Gone are the days when Indian large players were least interested in the nation’s domestic outsourcing market. For all major deals, they were eyeing U.S and Western European companies. But the trend changed significantly in 2007 when the actual twist came in. Indian companies fetched many major outsourcing deals. The Bank of India-HP deal, the Department of Company Affairs-TCS deal, the Dena Bank-Wipro deal, the Tata Teleservices-TCS deal, the Bharti-IBM deal, the Dabur-Accenture deal, and the Ministry of Finance-HP-Microsoft deal are the ones inked on a larger platform by Indian customers to fulfill their IT needs.
Initially the buzz started with IT-services deals, but it is now gradually expanding to the Business Process Outsourcing (BPO) segment as well. It is also estimated that in 2008 Indian revenues from international BPO market is likely to reach $11 billion and at the same time the domestic BPO revenues will stand at $1.6 billion, according to Nasscom, India’s national association of software and services companies. In fact, over the past five years, the offshore BPO services market grew at a compound annual growth rate of 37 percent, while the domestic BPO and IT-enabled services market stood at 50 percent.
The Indian domestic BPO market, which presently stands at $1.41 billion mark, is likely to increase by 35 percent to $5.38 billion by 2012, according to a recently released study by ValueNotes, an India-based business intelligence and research firm. Also, with growing awareness among customers and increasing interest among providers and surging maturity in the domestic market, the share of third-party providers — that presently stands at about $424 million — will increase significantly by 44 percent to 1.82 billion in the next four years.
Unlike the overseas business, labor or cost arbitrage does not drive the domestic BPO market. Strategic factors such as the need to scale rapidly, focus on core competencies, enhanced productivity and reduced time-to-market are driving domestic demand, according to Arun Jethmalani, CEO, ValueNotes Research.
Biggest Domestic BPO Buyers: Telecom and Banking
ValueNotes’ research study titled Opportunities in the Indian Domestic BPO Market also finds that the telecom industry in India is the biggest buyer of the domestic BPO services. This segment is expected to grow from $169 million in 2008 to $652 million in 2012. The study also finds that in the next four years the telecom sector will mainly outsource customer support, collections and analytics services. And, the increasing number of subscribers, the demand to drive business value to the customer and the entry of new providers will drive this sector. Banking is the second biggest buyer after telecom.
Other sectors that are seen as potential buyers include government, financial services, insurance, retail, airlines, travel and hospitality, technology logistics, manufacturing, utilities and media and entertainment.
The Providers Dashboard
The study also finds that more than 700 BPO services providers offer BPO services to the domestic market and, based on their size and market focus, classifies the third-party BPO services providers into four groups — International Leaders, India Leaders, Emerging Companies and ‘Me-too’ Players.
Third-party Provider Segmentation
| Group |
Providers
|
Key characteristics |
| International Leaders |
IBM-Daksh, HTMT,MphasiS BPO,FirstSource, HCL,Intelenet |
- Established BPO provider with total employees > 5,000
- Primary focus on international markets
- Presence across multiple locations
- Typically < 20% revenues from domestic customers.
|
| India Leaders |
Aegis BPO, Andromeda,InfoVision, OmniaBPO |
- Established BPO provider with total employees > 5,000
- Primary focus on domestic markets
- Typically > 60% revenues from domestic customers or substantial scale of domestic operation.
|
| Emerging Co.s |
ATS Services,Caretel, Intouch,Kankei, Magus,Spanco, vCustomer |
- Employee size 500 to 5,000
- Limited to specific verticals or horizontals; specialized offerings on a small scale only
- Cater to domestic and / or international customers
|
| ‘Me-too’ Players |
GK Management,Access Systems
|
- Typically < 400 employees
- Offering undifferentiated low-value services
- Limited presence in terms of delivery centers and marketing setup.
|
Source: ValueNotes Research
“A number of international focused BPOs (including Infosys, Genpact to name a few) are seriously looking at the domestic market. Given their scale and capabilities, some of these could be very successful. However, given their current negligible presence in the domestic market, these have not been considered in the above analysis,” cites the study. Further analysis of the study reveals the names of top domestic BPO providers for each of the groups — IBM Daksh, Intelenet HTMT and Mphasis BPO are the top among International Leaders; Aegis BPO, Androme Marketing, InfoVision are Omnia BPO leaders of India Leaders group; and Magus, SerWizSol, Spanco and vCustomer are the hot emerging companies.
