One quarter of the top BPOs will deplete by 2012
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One quarter of the top BPOs will deplete by 2012

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One quarter of the top BPOs will deplete by 2012
Bangalore: About one quarter of the top Business Process Outsourcing (BPO) operatives will not exist as separate entities by 2012. The rise of new vendors, acquisitions and market exits will change the BPO provider landscape in the coming years. The enterprises should look for warning signs while evaluating BPO vendors to lessen risks, states a recent report by analyst firm Gartner.

"As providers are exposed to the economic crisis, loss making contracts and an inability to adapt to standardized delivery models, many will struggle to survive in their current form. Some will be acquired and some will exit the market completely to be replaced by dynamic new players delivering BPO as automated, utility services," said Robert H. Brown, Research Vice President, Gartner.

The report "Assess and Manage Vendor Risks to Protect Your Business" has identified six key points to watch for, that might announce the predicted market shakeout. The report also identified the BPO vendors which may be the candidates for acquisition or for instant market exit.

The report suggests to look out for unprofitable portfolio BPO deals, as some BPO providers are carrying unprofitable contract portfolios, largely stemming from too much, too soon pursuit of the deals, without much thought as to how to transition them to a standardized, rationalized, profitable state of ongoing operations.

The enterprises have also been asked to gain insight into the vendor's track record of winning new businesses, particularly over a sustained period of two to three years. The report suggests that the loss of a major customer can be a leading indicator of trouble, especially if the remaining portfolio of business is small. The report suggested that some heavily leveraged vendors may be unable to obtain the necessary investment needed to bid on a business opportunity despite of attractive propositions.

The financial services sector accounts for about one-third of the total BPO market globally and provides significant amount of BPO revenue. The banking sector was the first to be exposed to the credit crunch resulting to financial meltdown. The mergers and acquisitions saw both current and prospective buyers of BPO getting out of play and this exposure could still leave many BPO providers vulnerable for long term.

Also, as per Gartner's previous BPO survey report, cancellation rates rose in 2008 as compared to 2007 data. On this basis, the report advises buyers to build exit strategies into contracts and develop contingencies for contract termination, especially before signing the deal.

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Reader's comments(21)
1: All BPOs are involved in illegal activities these days in India. I saw many BPOs that are not upto mark in thier Managers\' quality and threir CEO\'s quality. They are always thinking to cheat the executives by taking money from them in recruitment and during certification and confirmation. Example of such BPOs are Aegis BPO, I Energizer, Intelenet, EXL, Quatrro etc. I have very bitter experience with two of these Aegis BPO and I Energizer. Let All the BPOs get lost for ever and the managers of those BPOs get diseases like Heart disease, Jaundice, Paralysis, Diabetes, IMPOTENCE, Obesity etc.
Posted by:Anil - 10 Oct, 2009
2: i dont think that the BPOs will face any kind of problem they always think about their profit and not for loss.this sector supports 30% of the enemployment so the closing of some BPOs will effect our economy and our employment.
Posted by:Nadeem - 02 Oct, 2009
3: Consolidation and exit of unviable BPO units was long overdue. What this wave is also going to do is throwing up some unusual players like Xerox which just acquired ACS and Dell, which acquired Perot. Market dynamics and pricing will also change, and it will make it increasingly difficult for smaller BPOs to survive as the larger ones squeeze out the smaller guys. Firms that have efficient delivery systems, and are focused on SME segments will continue to thrive.
Posted by:Vinod - 01 Oct, 2009
4:
Consolidation and exit of unviable BPO units already started. For example: Brigade Corp (I)from Hyderabad, once a major business partner for HP is now almost near closure as it lost two major clients HP and Factset. It made lifes of around 1000 people miserable. Companies like these should exit BPO sector.
ravi Replied to: Vinod - 03 Oct, 2009
5: Absolutely Jean. We make the environment. Why blame the industry for the environment created. The people have chosen their lifestyles. It was not a compulsion to be living the way they are to be a part of this industry.
Why can't people accept the changes and the developments? One can choose for himself/herself whether they want to be farming for their living or being a lawyer or being service executive. When they can choose then why blame the industry.
And to the point mentioned on career..you can make a career. BPO industry has hierarchy levels that you can achieve...If you really want to live in the world of banking, teaching, accounting then stay there. Why are you even looking at this industry. Develop your skill-set and earn on that basis.
When will we stop criticising and grow up to accept the developments?
Posted by:Ridhima - 01 Oct, 2009
6: As written in the report, Cancellation rates rose in 2008 as compared to 2007 data. Well, its not that all the cancellations were done just because of the financial turmoil, the so-called crisis. However, there are more reasons to it. We need to study the eccentricities and reach at the depth before we comment on saying that people are going to lose jobs.

As far as this sector is concerned, may I have the honour to remind everyone that BPO sector is one of the largest revenue generator for us. It has huge number of people working at various levels. And the most interesting part is, that this is specialized sector, you really can't work at strategic level if you haven't worked at grassroots level. One should be worried about self failure than to worry about other's success.
Posted by:An Indian - 01 Oct, 2009
7: It's good to talk about jobs, but where is the career. BPO's were not existing earlier and people were paid based on their qualifications.

The easy money concept should go out of tomorrow's young generation.

Depending on cow rearing for organic farming, ancient medicines and agriculture is the time tested careers. Tomorrow IT may fail but Lord will still generate 1000 grains for one grain sowed on the ground. This is the real job. This is what India will show others in the days to come. This is how India will become Super Power.

Don't expect Terminator series of lifestyle anywhere nearby.
Posted by:K.A.Prabbu - 01 Oct, 2009
8:
Is the lifestyle that you are preaching here something that you follow? In other words, are you one of the farmers in the "India's Road to being a Superpower" Team. If you yourself needed a white collar job and weren't a farmer yourself, dont shove the blame onto the only industry that gives a youngster an opportunity to be self-sufficient at an early age. Its not easy money at all - its equally as hard earned as any other job that a qualification would fetch.

I don't understand why the "Superpower" discussion got in here! Is it that you are trying to say that just because of the BPO industry, we are lagging behind in becoming a superpower!

Its a pity Sir, that educated people like you just pass blames on to things that are beyond your understanding just because all the information that you have about it is through your gossips.
Sudhish Sudhakaran Replied to: K.A.Prabbu - 01 Oct, 2009
9:
Then where were India till 2000 using agriculture?
How agricultural products can be transmitted over wires and replicated?
Jean Replied to: K.A.Prabbu - 01 Oct, 2009
10:
More than 60% of people live in rural areas, hence agriculture should be given due prominence & not datas getting transmitted thro' wires.

The real point suggested by Mr.Prabhu is there should be a balance between rural & urban development. BPO's have ruined the younger generation.
sheshadri Replied to: Jean - 01 Oct, 2009
11: Thank god, may the people will get the job & salary as per their qualification and capability at least after that . be Indian & work for India.
Posted by:sam - 30 Sep, 2009
12:
I don't think your qualification should matter to get job. I fill an B.com person can lead the organisation if he taught some management skill. Here I emphsising on skills (experience) not education. Our Indian education system is more theoritcal and not practical. I can say here if you put 10th pass person in job give proper training about how job is done he can do far better than any qualified person. Our education system give student theoritical knowledge but doesn't give practical knowledge as a result students are more concerned with mugging up their sylabus and getting good mark when they enter the job market & join company they flung because study method they applied. I know I will mentioned that every organisation provides training plan. Here I would like to mention that certainly they will provide training but they will not be able to develop these people's logic to perform the job. People should select on there relevent experience and on the basis on their apptitude test. Apptitude test mean basic logic and reasoning test where company will utilise their unique skill for company's benefit. and I want metioned again that people should select on the basis of their capabilities not qualification.
pravs Replied to: sam - 03 Oct, 2009
13: This is a rather disturbing study, hope the impact is not very bad in India because many lose their jobs..
Posted by:Dilip - 30 Sep, 2009
14:
May be a good time for the Indian youth to realize that faking American accent and thinking that,that will set them apart is misconstrued. Go back to school and get advanced education and the solution is right there
I_Love_India Replied to: Dilip - 30 Sep, 2009
15:
so correctly said, enuff of fakin done all these years, time to tie up our laces n work for INDIA!go for higher studies n get into jobs waitin for u.Innumerable jobs in so many sectors r left vacant.then why do we sit for calls of people askin silly questions like where is the START button on an XP screen!
Subhash Replied to: I_Love_India - 30 Sep, 2009
16:
Just think the no. of jobs that 'll be lost. Just think which sector hired even in the bad times of recession. Think about the no. of graduates india produces every year keeping in mind the no. of job opprtunities available. Believe me, working in BPO is not that easy. I m sure none of us have applied everything we studied in our lives, spending hours to understand various mathematics concepts, cramming history, understanding various chemical reactions. How many of them have we actulally used in our lives? Its this mentality due to which people dont view BPO workers with a bad eye. No business can survive without customer service, none can. I m surprised by many commenting to this like go back to college and study. i know numerous highly qualified individuals stiving hard to get jobs in these bad times of recession, and honestly we all know about the standard of graduates graduating every year except those from a few reputed industries, all of us know that
So just think what will happen if this survey's prediction gets true. Unumployment will shoot up, so will crime rate, amongst numerous other things
Think_with_your _eyes_open Replied to: Subhash - 30 Sep, 2009
17:
I would second that, BPO has grown as an industry and people who are not working in one do not know that its more than just customer service.. now BPOs have multiple processes...going into finance and accounts..not to be mentioned the highly qualified CAs are working in BPOs in the F&A processes. Now BPOs employ MBA Finance, Marketing, CAs Law students and what not. What kills India is people who talk without knowledge on the subject. People knowledge is not born from the books, you need a sensible mind to understand what counts as knowledge..
Ridhima Replied to: Think_with_your _eyes_open - 01 Oct, 2009
18:
and to be very honest, if people not qualified as much as you are and still are getting higher than you..then get a reality check done..there might be a problem with your profession...why blame others for your inability..
Ridhima Replied to: Ridhima - 01 Oct, 2009
19:
I too agree with it. Institutions create students with obsolete skills. So better adapt those skills that the industry requires. Why blaming on others advantages?
Jean Replied to: Ridhima - 01 Oct, 2009
20:
I agree.In the name of technical education students coming out of engineering colleges,only 10% are employable.Huge gap between their skill sets and required skill sets.BPO have given the job to the many youngsters and also given them world class environment to work and made them capable of working in any part of the world.Also secondary jobs created by this industry are phenomenal.
Sanjay Replied to: Jean - 01 Oct, 2009
21:
Hi Abhilash

I will be interested in knowing more about the opportunity.

Thanks

Rajesh

Rajesh Singh Replied to: abhilash - 01 Oct, 2009