The emerging reality is that enterprises need to focus on their ‘core business competencies,’ while forming strategic partnerships for all non-core business processes. The best partnerships are formed within the context of long-term, ‘win-win’ strategic relationships with a relatively small number of partner / service providers who are themselves focused on achieving and delivering ‘world’s best practice’ services and products. This transformation is driving the growth of BPO.

Will BPO be the next big wave of offshore opportunities for Indian entrepreneurs? Demand for offshore services initially focused on staff augmentation (particularly during the late 1990s, when demand for Y2K experts exceeded supply), which then shifted to applications development and applications outsourcing.

Today, as enterprises become more familiar with the offshore model, they are beginning to rely increasingly on external service providers with offshore capabilities to fulfill their complex and sophisticated service needs.

However, the scenario in the BPO space is rather different. Demand for offshore externalized services has still not matured completely, but there is a history of internal offshore processing by large corporations in the areas of payroll management, accounting transactions management, medical transcription and contact center services.

Gartner predicts that the global BPO market will be worth $243.5 billion by the year 2005. For India in particular, this is a big opportunity and the country needs to capitalize on what can best be described as its core strength: A large pool of young, talented, educated, highly-skilled, English-speaking workers.

Gartner has identified 5 business models, as outlined below, amongst which models 2, 3 and 5 are operational and most suitable for India:


- U.S.-based BPO providers with offshore facilities. (Covansys, Exult)

- Out located facilities: (GE, AMEX, Citibank, Worldbank)

- Local IT service providers: Several local IT service providers are considering offering BPO services as a way to create new revenue streams beyond existing consulting, development and integration service lines (E.g., Infosys set up Progeon, and Wipro invested in Spectramind)

- Process specialists: Providers specialized in a process area (India Life Hewitt)

- Pure-play BPO providers: Several start-ups are positioning themselves to provide contact center services and back-office processing services (Spectramind, Daksh)

Today, service providers are beginning to position themselves in order to offer offshore BPO services, making investments in delivery centers across the country. Gartner has also noticed the emergence of a new hybrid model — large shared service centers belonging to MNCs beginning to offer (and rather successfully at that) their services to companies overseas. The successful spin-off of WNS, a subsidiary of British Airways, is a case in point. This is an interesting business model and can probably be explained as emerging from the lack of experience of Indian entrepreneurs in this new, emerging opportunity.

Opportunities are aplenty and BPO has the potential to drive India’s economic growth over the next decade. However, there is an active role for the government in terms of improving infrastructure, creating special, liberal economic zones within the country to offer level playing field to India entrepreneurs. The government and the various industry associations also need to work closely together in creating visibility and promoting opportunities, besides attracting entrepreneurial talent within the country.

Sujay Chohan is Group Vice President and Country Director, responsible for Gartner’s Research & Advisory Services. He is based in Mumbai. Over the past five years, he was responsible for setting up and building the Research & Advisory base for Gartner, covering on-going research in all areas of IT.
Sujay is also a successful entrepreneur and set up a marketing & advisory company in the late 80’s. He was also responsible for the entry and successful launch of MIS, the flagship magazine of the Australian Strategic Publishing Group and following up his passion for the outdoors, he launched the first online booking engine for the adventure travel industry.