Indian BPO growth seen steady

Those who will provide the right value proposition and engage in delivering quality services in the BPO (Business Process Outsourcing) industry will survive the turmoil being witnessed by the sector, Nasscom Chairman Pramod Bhasin said here on Tuesday.

The BPO sector has clocked a compounded annual growth rate of over 37 per cent to aggregate revenues of US$14.7 billion in fiscal year 2009 from US$ 1.6 billion in fiscal year 2002. According to Nasscom Perspective 2020 Report the sector has a total addressable market of US$605-660 billion by 2020.

Further, the sector, which saw direct employment in this period increase from 155,000 to almost 1 million, despite the tough economic environment, is expected to grow in fiscal year 2010 and remain a net hirer, according to Nasscom.

Participating in a round-table, that kicked off the two-day 11th Nasscom BPO Strategy Summit 2009, Bhasin said while the sector, per se, was going through a period of extreme pain, with clients undertaking series of restructuring and rationalisation of their businesses, to beat the global downturn, it is the smaller BPOs are bearing the severe brunt of the slump.

He, however, struck an optimistic note that, despite the rate of decline in business being volatile, the sector is likely to see better times in the medium-to-long term horizon.

The current downturn, in fact, provides the BPO sector opportunities to acquire businesses abroad. It’s good time for Indian BPO players to go in for acquisitions and buy assets in the US as valuations have become cheap, he added.

Pricing pressures

Concurring, EXLService.com Executive Chairman Vikram Talwar, said the BPO players are facing immense pricing pressures and erosion of margins, and going forward, it was going to be value game for them. As a result they need to overhaul their internal efficiencies and beat the expectations of the client companies, he added. Observing that globalisation of BPO industry would continue to accelerate, Bhasin said, companies need to move from process based revenue model to quality of services delivered price negotiations and take to projects in which they have strong technological capability and domain expertise.

Exhorting Indian BPOs to expand to markets beyond

English-speaking space, Nasscom President Som Mittal said as a result of the Obama rhetoric the optics of outsourcing has changed in that now companies do not want to be seen/visible outsourcing, though it was still very much on.