The India BPO Industry Report 2013

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  • 1. STANDING STRONG The India BPO Industry Report 2013
  • 2. India is once again in the news - but not for something the Indians would find very flattering. Recent reports about the Indian Rupees rapid fall, dangerously exposing it to wild market swings, is hogging the headlines of all major dailies worldwide. Its no surprise that policymakers are now scrambling for solutions to avert a much bigger economic disaster easily get out of hand. If theres one silver lining out of all of this, its that the Indian BPO market is still standing strong and ironic as it is, the weak Rupee makes the country a more cost-competitive destination for global outsourcing firms. In a recent report by Live Mint & The Wall Street Journal, quoting findings from Cushman & Wakefield, it was revealed that India remains an attractive destination for IT and BPO companies, ahead of China and Philippines. The availability of qualified and affordable manpower coupled with positive business environment continues to be Indias main source of strength. The Philippines, China, Malaysia, Indonesia and Vietnam are consolidating their positions in different domains of the outsourcing business even as India remains a prime destination for software development and BPO operations thanks to its pool of English-speaking talent, good network infrastructure, cost arbitrage and high quality of services, the report noted. On Indias emerging destinations, it said that apart from established IT destinations Bangalore, Chennai, Hyderabad, Pune, Gurgaon, Kolkata and Mumbai, tier-II and tier-III cities such as Bhubaneswar, Chandigarh, Jaipur and Kochi are emerging as new destinations for IT businesses.
  • 3. Other countries vying for the top spot In the global BPO space, India is on top. But, how long might this last? Serious competition posed by other emerging countries in the region cant simply be ignored. In fact, a recent Nasscom report indicated that India has lost about 10 percent market share to the rest of the world in the last five years, while countries like China, Malaysia and Philippines are slowly gaining momentum. Malaysia The Malaysian SSO Industry houses nearly 250 centres and has been identified under the ongoing Economic Transformation Program as a key driver for growth. Shared services is today recognized as a competitive strategy leveraging Information & Communication Technology (ICT), Finance & Accounting, Human Resources and Engineering Design & Services to improve organizations. The main 5 industry sectors supported by shared services in Malaysia are: 1. 2. 3. 4. 5. Banking, Financial Services & Insurance (BFSI) Information & Communication Technology (ICT) Pharmaceutical & Health (P&H) Logistics & Transportation (L&T) Energy, Chemical & Resources (ECR) China China has a large, skilled population of workers who have mastered or grew up hearing and speaking Japanese and Korean. BPOs are growing and moving into Dalian, in the north-east which has been traditionally either a part of the Korean, or the Japanese empires for over half of the last 500 years. Look for Dalian and other eastern cities to take on more R&D, ITO and high-end BPO work for Korea, Japan and the rest of the developed world over the next five years. Philippines Latest available information revealed that the Philippine IT-BPO industry has 30-per cent share of the US market and 15-20 per cent of Asia Pacific; the BPO sector accounted for 630,000 workers and $11 billion in revenues in 2011 according to a report from Stratbase Research Institute (SRI). In recent years, the Philippines has earned a reputation as one of the most preferred Outsourcing destinations in the world. In a latest study of Philippine IT-BPO Road Map 2011-2016 commissioned by the Business Processing Association of the Philippines (BPAP), the countrys largest business process outsourcing group, plans were laid out for the industry to achieve US$25 billion in annual revenue by 2016 and to directly employ 1.3 million workers.
  • 4. IndiA, still AN ATTRACTIVE outsourcing destination The availability of qualified and affordable manpower coupled with a positive business environment continues to be Indias main source of strength. In fact, the same study by Cushman & Wakefield maintained that India outperforms its counterparts, Philippines, China, Malaysia and other South Asian countries in IT-BPO industry due to availability of English speaking and qualified talent, higher cost arbitrage, rapidly growing domestic market, stable political system, positive business environment that fosters FDI in the sector among others. Latest figures released by Nasscom complements these findings. Indian IT-BPO Industry performance Revenues from Fixed Price Contracts: 45.8 45.7% 45.4 45.0 44.6% 44.8 44.4 44.0 43.7% 43.8 43.7% 43.4% 43.4 43.0 Dec-11 Mar-12 Jun-12 Sep-12 Dec-12
  • 5. Net Client Additions: 3900 118 Number of active clients Net client addition 120 3813 3800 3700 80 56 3628 3587 3600 100 3653 41 3500 3695 60 42 40 25 3400 20 Dec-11 Mar-12 Jun-12 Sep-12 Dec-12 Source: Nasscom Quarterly Industry Review February 2013. Note: Analysis of Indian IT-BPO industry performance during the quarter. The analysis is based on the results declared by the top 151 India-centric IT-BPO companies which comprise about 40-45% of the industry. To see full report, click HERE New Delivery Centers established/announced US-based Fulcrum Worldwide is setting up a new software delivery and operations centre at Hinjewadi, Pune with a capacity of 2,000 people Maveric Systems has opened a delivery centre in Mumbai, and plans to recruit close to 150 people Source: Nasscom Quarterly Industry Review February 2013
  • 6. India remains a prime destination for software development and BPO operations, thanks to its pool of English-speaking talent, good network infrastructure, cost arbitrage and high quality of services. What is Business Transformation (and why it matters?) Over the past decades, some of the more sophisticated organizations have recognized that internal collaboration and knowledge sharing is what gives them a competitive advantage. More recently, brand-new market entrants [think of Google, Facebook, and even Amazon, back in the day] kicked off their growth-oriented businesses by basing them on the technologies and frameworks that just didnt exist 15, or even 10, years ago. These frameworks release employees from their desks, open up dialogues between different levels of management, and provide transparency across teams and even geographies. An engineer in Delhi can discuss project fixes with an applications specialist in Krakow, and both can share their conclusions with the implementation team in Houston all within a days work. Video-conferencing is now the norm and gone are the days of satellites beaming grainy pictures that looked as if they came from the moon. Today, modern shared services centres have state-of-the-art conferencing facilities that would not look out of place at NASA. And organizations like the Commonwealth Bank are transitioning their workforce cultures to ones that are modern, flexible, and activity-based, to accommodate flexible working practices and effectiveness. Essentially: organizations are not just getting smarter, they are being built smarter. Consider the modern, mobile office [and death of the cubicle]. After the workforce retrenching of the last five years, careful growth, where it exists, is being nurtured within open plan offices, and hub-based meeting areas. A recent article in the Wall Street Journal highlighted that new offices are being designed with smaller meeting rooms, in recognition of the fact that most of todays meetings consist of 2 to 4 people brainstorming and not 20 people sitting around a formal boardroom table. Conversely, the space thus saved is turned into open meeting areas, with sofas, ping-pong tables and full networking capabilities. The idea is to bring a team together and let them evolve ideas in a completely new, free-thinking environment. There is even a parallel move to stopping the slow but steady trickle of home-workers out of the office, in recognition of the value that interactive teamwork provides to innovative thinking. Yahoos CEO, Marissa Mayer, earlier this year, had to endure a media backlash in reaction to a leaked memo suggesting shed prefer workers to be onsite but the trend seems to be in her favour. In a recent report on social-media-enabled transformation, Cognizants researchers note that we are nearing the end of the Internet-enabled IT wave and are on the cusp of making the leap to the SMAC (Social Media, Analytics & Cloud) wave. This follows what Cognizant terms the 4 waves of corporate IT: mainframe (1960-1976), minicomputer (1976-1992), distributed PC (1992-2001), and Internet (2002-2012). As with other curve jumps, this shift will generate significant dislocation and wealth creation on the supply (or vendor) side of the industry across hardware, software and