Indian BPO cos likely to merge: Forrester
By agencies   |   Tuesday, 11 October 2005, 19:30 IST
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NEW DELHI: In a bid to stave off competition from global players like IBM and Accenture, pure play Indian BPO companies are likely to merge or acquire smaller BPO firms, global research firm Forrester Research has said. "After Indian BPO suppliers with complementary capabilities struggle head-to-head, they will likely seek to combine their strengths against the steadily mounting threats from Accenture, IBM, and other global players. High valuations for Indian BPO companies are slowing consolidation, but mergers between existing offshore BPO players, and transactions involving Indian offshore BPO players and global majors, are increasingly likely scenarios," Forrester Research said. Forrester has discovered that offshore Indian BPO market was trying to find profitable and scalable business models with high `customer retention.' "As supplier attention turns to transaction-processing and knowledge processing opportunities, concerns abound about the health of the call center industry, which is plagued by high attrition rates and concerns about commodity services. Amidst continuing growth, threat from other geographies and global services firms like IBM and Accenture is looming large," it said. It also said limits of labor arbitrage were becoming more visible. In addition, the existing BPO units of companies like Wipro, Tata Consultancy Services and Infosys Technologies - were emphasizing on integrated solutions, combining their IT capabilities and domain expertise, while leveraging their existing base of customers for BPO opportunities. On the other hand, Forrester said though pure play BPO companies like Genpact (formerly Gecis Global) and WNS Global Services lack broad-based IT capability they are emphasizing their growing scale in transaction processing, voice, and knowledge-processing services and enjoying the benefit of substantial work streams from their prior captive parents, it said. The report also said that Indian BPO companies need not fear about emerging competition from other countries. It said, "Truly competitive companies could take years to emerge from locations like China." More imminent is the threat from global majors like Accenture and IBM, who are not only expanding their Indian footprint substantially but also boast substantial presence globally, it added. "The spectre of IBM and Accenture loom large. The significant increases in local Indian staff made by IBM and Accenture have not gone unnoticed by Indian BPO players, despite the fact that these global majors pose a very different competitive profile, preferring to sell comprehensive solutions from the top down as compared to the Indian BPO suppliers' tendency to sell from the bottom up. Indian BPO players are bracing for more direct competition as the global majors accede to customer demand for narrower, more focused BPO services," Forrester pointed out.

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