Technical Devices

       The USD 16.9-billion Indian BPO industry is witnessing opportunities arising out of the economic challenges in the US, its biggest market. Amid fears of another deep recession in the US, industry experts believe that the fundamentals of the BPO industry offer it the competitive advantage.           
 
BPO platform is all about driving efficiency and doing more with less. This is our inherent business model which would naturally benefit during times of economic slowdown when clients seek efficiency and effectiveness, says Swami Swaminathan, CEO and MD, Infosys BPO.  

According to an analyst of a Bangalore-based research firm who requested anonymity, Whenever there is a downturn, there are two standard responses to cut cost and increase efficiency. Interestingly, both of these are BPO-friendly.  

While there is an air of positive energy around the industry, the real impact could be like a double-edged sword. Last time when we had a similar situation about two years back, some prospective clients put their decisions to offshore on the back burner because of the uncertainty which hurt the industry. But some others actually decided to move faster, giving them the edge over competition, which was not only good for them but also for the global BPO industry, says S Nagarajan, founder and chief people officer of 24×7 Customer.             

Some industry insiders also feel it may be little too early to judge the impact of any US recession on the Indian BPO industry. Its premature to say if the BPO industry will gain. However, we must understand that customers need us in good times as well as in bad times. The reasons change. If in the good times, they need us to manage growth, then in the bad times, they need us to manage cost, improve quality and enhance profitability. So, in a way, if in the bad times, the customers need more help in these aspects, then we do have an opportunity, Raman Roy, Chairman and Managing Director, Quattro BPO Solutions told InformationWeek.

On the other hand, its interesting to note a fundamental difference between the IT and the BPO industry, which makes the latter gain relatively more than the former. In the immediate term, IT is an investment whereas BPO is about savings, says Swaminathan. In terms of the cost metrics, A lot of the IT industry spend is discretionary spending as compared to the spend in the BPO sector which is largely non-discretionary, adds Roy.               

In fact, the BPO sector has been growing faster than the IT sector over the last decade and industry insiders expect this trend to continue over the next five years. Nasscom estimates that the BPO sector grew 18-fold to USD 16.9 billion between 2001 and 2011, while the IT sector over the same period grew just 9 times to USD 60 billion. According to rating agency Crisil, while the IT sector grew by seven percent during the last downturn, the BPO sector grew as much as 20 percent.          

Over the years, Indian BPOs have moved from a transaction-based services delivery model to a value-based delivery model which makes them globally competent players.
While India is losing market share in the voice space, it is gaining share in areas such as knowledge process outsourcing (KPO) and legal process outsourcing (LPO). An analyst points out that despite opportunities that might arise out of the US slowdown, Indian BPOs will have to compete with other emerging geographies to gain a larger share of the pie. Deeper domain knowledge and expertise in their offerings will be the key differentiator.                

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