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Domestic BPO Scoring a Home Run

Domestic BPO Scoring a Home Run

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Published by ami4

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Published by: ami4 on Jun 09, 2009
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AuGusT 2008
Domtc BPO:scorg a Hom R
seZ: A wdo or th iT sctor
natoa sk Rgtry: spg“scrty” or th ida iT-BPO idtry
what Kp th ida iT-BPOladr at th Top
Domtc BPO Markt  ida:scorg a Hom R
nAssCOM Rarch: Forayg thsotar Prodct spac
Booz & Compay: Byod Arbtrag:Ohorg o egrg, Rarchad Dvopmt
Today global uncertainties are at their highest withuctuating currencies, unprecedented oil prices,ood crisis, sub-prime led downturn and orthcomingUS elections, all coming together at the same time.No surprise that the mood across businesses issombre, and sometimes sceptical. Businessesworldwide are under pressure as is the Indian IT-BPOsector; however, it continues to grow proftably. In dollarterms, the absolute growth in FY2007 was a robustUSD 12.4 billion, and the orecast or growth in FY2009is 21-24 per cent, though on a larger base as perNASSCOM research. These confrm India’s strong valueproposition and the resilience o the industry.It is critical to reect on growth drivers both orIndian and multinational companies. The industryhas progressively diversifed its geographical spread,service oerings and the vertical market it operatesin, thereby providing cushioning against the downturnacross sectors, customer relationships have maturedand value being delivered by companies has increased.Besides cost, India oers reduced time-to-marketand talent. This is important given the IT-led businesstransormation that customers worldwide are goingthrough. Today, Indian IT-BPO companies are deliveringservices that are an integral part o the global deliverychains or customers, and they are frmly committedto moving towards an end-to-end services model – wehave seen this demonstratively in the BPO segment.Reacting to margin pressures, companies areenhancing productivity, efciency and resourceutilisation. Wage moderation and lowering attritionlevels are proo points o this trend. We believe beneftso this efciency improvement will have long-termeects that will ensure increased competitiveness othe Indian IT-BPO industry against emerging locations.As companies look at markets beyond the US andthe UK, the growing and relatively insulated domesticmarket in India looks increasingly attractive. Economicgrowth has spurred IT spending government andprivate sectors, and globally ocused companiesare now tapping into the domestic market – a largeopportunity. Companies operating in the small andmedium segment have also exhibited maturity withtheir niche strategy. 100 new product companies havebeen ormed in the last 12 months alone, many o thesebeing backed by institutional unding – a reection othe positive investor confdence.We still have a lot o work to do. The education systemneeds to be upgraded; economic development needsspread to Tier-2 and 3 cities; inrastructure needs to beimproved and efcient power systems are required tooset oil cost impact. Policy level streamlining or STPIand SEZ, resolving complexities at operating levels inVAT, service tax and FBT is an action item. We needgovernment support or this. NASSCOM continues towork with appropriate agencies to get these importantissues resolved, as all our member companies workagainst the global uncertainties and together, we areconfdent o steering the industry through this phase
Sm MittlPresident, NaSScoM
Ho th ida iT-BPO idtry Facg Crrt Goba ucrtat
3August 2008
Prdt’ Dk
The services India is deliveringtoday are an integral part othe global delivery chain orcustomers, and they are frmlycommitted to moving towards anend-to-end services model – wehave seen this demonstratively inthe BPO segment.
August 2008
i Foc
Th Domtc BPO Markt  ida:scorg a Hom R!
The Indian domestic market has undergone atransormation over the past decade – rising romthe periphery to emerge as a viable, high potentialopportunity or the country’s IT-BPO sector. From asituation where the domestic business did not fgureon the industry’s agenda, to now, when companiesare evolving strategies targeted at building a presencein the domestic sector, the market has witnessedheightened interest rom customers, as well asoutsourcing services providers at a global level. Ithas also emerged as a silver lining or companies intoday’s changing markets especially against globaleconomic uncertainties.As per NASSCOM’s analysis, the domestic market sawa growth o 40 per cent (26 per cent in INR) in FY2008to clock revenues o USD 11.6 billion. With 450,000employees currently, FY2009 estimates peg thedomestic market ~ USD 13 billion, backed by a stronggrowth prospect, with sustained ination as a possiblemedium-term risk.Domestic BPO has emerged as a major segment inthis pie. As Rajdeep Sahrawat, VP, NASSCOM says, “Itwas predominantly voice, but other complex processeshave been added, with more in the pipeline.” He alsoeels, “there is very little to dierentiate companiesrom the product point o view and thereore oeringvery high quality, personalised, 24x7 customer serviceis critical. This requires scale, exibility and expertise”.Domestic players have certain advantages, starting withareas like cost management and efciencies, deeperunderstanding o Indian businesses, requirementsand greater exibility. The market in its current growthphase will always need niche mid-sized quality players.In this space, since English language skills are notimperative, the market becomes relatively larger,spanning Tier-2 and 3 cities as well.The reasons or this recent turnaround are relatedto the changing global market conditions, however,the Indian market is slightly insulated to thesedisruptions, displaying a growth rate o 26-27 per centin FY2008. Recent outsorucing deals in the verticalslike banking, insurance, airlines and telecom alsosupport this trend.Globalisation is a actor spurring organisations toimprove efciencies and utilisation – the credit orboth these go to the BPO industry. “As the Indianeconomy becomes globally integrated, businesses inIndia are beginning to ace increasing levels o globalcompetition and being driven to deliver world-classproducts and services. The BPO sector has emergedas an eective means o entrusting specialistswith the task o consistently delivering the desiredhigh levels o quality, leaving the client organisationsto ocus on their core businesses,” comments RadhikaBalasubramanian, COO, Domestic BPO Operations,Intelenet Global Services.Intelenet was quick to recognise the growing potentialo the domestic BPO segment and was one o thefrst movers in the industry. The company acquiredSparsh and entered the market in 2005. Since then,

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