EMIS Emerging Market Information Service IndiaBPO | Page 15
IT-BPO Highlights
The Indian BPO industry accounts for 36% in the global BPO sourcing market. The contribution of IT-BPO to India's GDP grew to 7.5% in FY 2011 from 6.4% in 2008. The Small and Medium Enterprise sector contributed USD 5bn in revenues to the ITBPO industry in FY 2012, the National Association of Software and Services Companies (NASSCOM) said. The IT BPO industry in the country is likely to meet its 2020 revenue target of USD 225bn within the set deadline.
Importance
Employment
According to NASSCOM estimates, salaries in the sector went up some 10-14% in FY 2012 and rose additionally by some 810% in FY 2013. The IT-BPO industry was expected to create 200,000 jobs in FY 2013, down from 230,000 jobs in FY 2012 and 240,000 in FY 2011. At the same time, attrition rates are as high as 40-50% , as companies are finding it difficult to hold on to employees gradually getting disillusioned over the lack of career growth opportunities and falling compensation and bonuses.
Outlook
According to global strategic business advisory Hackett Group, offshoring of jobs to India will decline from 2014 and will reach the end of its lifecycle in eight years, as traditional outsourcers would have reached maturity and there would be no more jobs left to outsource. Other outsourcing destinations like the Philippines and near-shore countries like Brazil and Argentina (for the United States) and Poland (for Europe) have successfully claimed shares of the global outsourcing business.
Next Moves
Most of the Indian BPO vendors do not accept the forecast of Hackett Group but admit the need to move up the value chain to charge higher prices and increase non-linear income and thus profit margins. Future growth will primarily be driven by new business models and emerging technologies such as cloud, mobility, analytics, social media and specific vertical solutions. According to the senior VP of Indian BPO company Genpact, smaller players with niche competences will get acquired by larger firms to help them acquire or enhance expertise and skills in service horizontals and verticals.
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