Tuesday, 14 June 2011

India’s domestic BPO market to grow 23 percent in 2011

New Delhi: The country's domestic market for business process outsourcing is projected to grow over 23 percent to touch USD 1.4 billion this year, says Gartner.

In 2010, the domestic Business Process Outsourcing (BPO) market was worth USD 1.1 billion.

"It is relatively good growth rate (of over 23 per cent). The domestic BPO market is expected to see increased volumes, especially in the telecom space," Gartner's Research Director T J Singh told a news agency.

He noted that more areas are likely to adopt BPO models.

According to global research group Gartner, the domestic BPO market would reach USD 1.69 billion next year and increase to USD 2.47 billion by 2014.

The market's growth in 2010 was mainly on the back of rising volumes in existing BPO engagements and a number of new BPO deals from pent-up demand in the previous year.

In 2009, the market was worth around USD 885.6 million.

Apart from many India-based BPO service providers, those from the US and Europe are also focusing on the Indian domestic market.

As per Gartner, some of the local providers include Omnia, Kenkei, Androemeda, Genpact, Magus, MphasiS, Intelenet Global Services, Tech Mahindra, Aegis, Spanco and HTMT.

"... service providers who were focusing solely on the international market realised that there is merit in the Indian BPO market, given the fact that it grew rapidly even during the global economic crisis.

"The large and midsize players have now stepped up their activities," Singh noted.

Meanwhile, the BPO services market in the Asia Pacific region, excluding Japan, is expected to rise to USD 9.86 billion in 2011 from USD 8.6 billion in 2010.

Singh said there is growing demand for multi-country shared services and BPO services within Asia/Pacific.

"Buyers continue to invest in services that deliver scalable, high quality and consistent services across their geographical presence," he added.

Attrition rate in India's BPO sector increases

New Delhi: Erratic working hours and perceived lack of long-term career growth has led to 55 percent increase in attrition rate of Indian BPOs in the last four months, an industry chamber study has said.

During December 2010-April 2011, the attrition rate in the business process outsourcing (BPOs) has increased to 55 percent from about 40 percent in the same period during the previous year, Assocham study said.

“Although the BPO sector has been popular since the beginning as it has opened up plenty of job opportunities, the high attrition rate has plagued the sector now,” said Assocham Secretary General, D S Rawat.

Besides, the industry is facing serious challenges like shortage of skilled and educated workers, the study said.

Services offered by the IT/ITES and BPOs in the domains of pharmaceuticals and financial services have registered an attrition rate of 60 percent; in retail and IT sectors 50 percent; and in automobiles, FMCG and infrastructure sectors 50 percent.

“The growing trend of job-switching in the industry might prove fatal for the survival and growth of India’s BPO sector,” Rawat said.

India’s BPO industry is facing a stiff competition from countries like Mexico, Philippines, Malaysia, China, Canada and Ireland.

“Rapid job switches amongst professionals have certainly raised the wages, but there is hardly any development of expertise amongst the employees which is significant to justify their fat pay cheques globally,” Rawat said.

Tuesday, 7 June 2011

New deals rev up BPO sector

Source: BPO Watch India

Americans and Europeans love the concept of outsourcing, but Indians too are realizing the benefits of outsourcing their back-end and IT management. Apart from the natural recovery of the economy, there are other reasons too to this uptake and interest by Indian customers.

The first quarter of 2011 has witnessed 20 outsourcing contracts by Indian clients, against 12 in the same quarter last year. The last year's first quarter had only one BPO deal, which was signed between Genpact and Max New York Life Insurance. But this year, the number has reached to six, basically supported by the banking vertical, says a report by Everest Group in a report published in the Financial Express.

Amneet Singh, vice-president - global sourcing, Everest Group said that earlier the domestic outsourcing market was only skewed to IT. The year 2010 had only 18% BPO domestic deals out of the total outsourcing deals. This year they expect it to be 25%.

Nasscom too feels that IT services growth will be 16.8 % in FY 2011 driven by localized strategies of service providers. On similar lines, the domestic BPO segment will grow by 16.9% motivated by demand from new verticals and technology platforms.

Genpact chief operating officer NV (Tiger) Tyagarajan admits that the domestic clients are now looking at transformational deals. They are keen to adopt new technology, shared services and business analytics and want to get global expertise. This is a market which has a lot of scope for innovation and all the Indian clients are growing at a rate of 30-40% a year. The opportunity to be tapped is huge.

With growth in domestic IT market expected to outpace India's GDP growth, the industry had a strong focus in this segment. The domestic market grew by 16% to aggregate revenues of Rs 787 billion. Increased technology adoption across government, corporates and SMBs for providing citizen services, enhanced internal controls and customer service led to an increase in outsourcing within the domestic market also.

Dani from Everest Group mentions that while globally the split between ITO and BPO deals is 2/3rd and 1/3rd -- in India, it is 80-85% ITO deals and the rest is BPO. However, on the positive side, the contribution of Indian buyers to outsourcing deals is now 5%, which was negligible two years back. And industry analysts expect this to reach 10% within the next two to three years, said the Financial Express report.