Productivity the mantra for BPO sector
By agencies   |   Monday, 07 November 2005, 20:30 IST
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BANGALORE: The values of BPO contracts are falling but the drivers behind that is not a tapering-off of demand, but an increasing tendency to contract for a single process, a reduction in the capital contribution required as well as an internalization of offshore service rates. According to Siddharth Pai, Managing Partner, TPI, there is a strong trend favoring the best-of-breed players in the BPO market and this is likely to continue for the next two to three years. He said, “several Indian third party service providers have been trying to get cross-sell benefits by pushing their IT and BP skills together, and while that might work for some existing clients, most clients are more likely today to look for the best player in a certain category and outsource that function.” The contract renegotiations are a sourcing advisory that handles IT deals greater than $50 million and BPO deals greater than $25 million. More and more multi-national companies are accelerating on global services delivery in the next 18 months - even as labor arbitrage drives the market now. In the future it will be productivity increases that will differentiate players. Initial outsourcing will seek cost savings but 12-18 months down the line, the relationship will require very high process/vertical knowledge and process improvements, he said. Therefore the strategic choices for Indian service providers are clear- either they have to become the best-of-breed players, able to command premiums for their process and domain knowledge or they have to become the best factories — unbeatable on the offshore delivery front, but with a global delivery base.

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