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Indian BPO Industry What to Watch Out in the Future?

Vimali Swamy
Wednesday, September 1, 2010
Vimali Swamy
The year 2010 has been a turning point for most of the industries, especially those that had been severely affected by the economic downturn. One of the hardest hit industries during recession, the BPO sector is now witnessing a gradual upturn. It is reinventing itself and moving away from the traditional business practices. In a candid chat with SiliconIndia, S Vishawanathan, COO, NIIT Smartserve discusses the trends, challenges, and future of the BPO in India.

Traditionally, the BPO was engaged only for niche services such as that of human resources or finance and accounting. It was only later that outsourcing was integrated within IT processes. But the BPO industry has come a long way and has brought about a fundamental shift in its position within the technology industry. While in the past BPOs were looked at as a separate service when compared to IT, today the IT and ITeS services are often coupled together as a single sector. Here are some trends to look for:

BPO Spending is Catching up
The global IT outsourcing market has traditionally outpaced the BPO market in growth, but that’s changing. In 2009, ITO spending was estimated to be between $230-250 billion, well above BPO spending, according to Accenture. But now BPO is growing at a faster rate. Accenture estimates that mainstream BPO expenditures will top $300 billion by 2012.

BPO Supplier Consolidation is
According to a 2009 Gartner study focused on India-based BPO suppliers, a number of BPO service providers will exit the market in coming years. The small and emerging players have been facing a stream of challenges, especially since the onset of recession and are fighting to stay afloat. At the same time, the big players are looking at aligning their services and as a result are on the look out for acquiring niche service providers. One quarter of the top business process outsourcing service providers will not exist as separate entities by 2012, it says. Market exit, acquisitions, and the ascent of new vendors will rearrange the BPO provider landscape in the coming years.

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