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The years that have gone by have been defining moments in many ways for the economies in general and the BPO services in particular. They have made us realign our thinking, question some convictions and relook at some issues. In all, we see some paradigm shifts which have enabled us to align to these realities. The times ahead are going to be even more challenging, capital scarce and we will need to modulate our strategies to account for that environment.
Trends point towards a greater IT adoption in retail, healthcare, telecom and BFSI (the banking, financial services and insurance vertical) and 80 percent of growth to come from new areas. BFSI contributes almost 41 percent to the industry's revenues. With BPOs moving up the value chain to provide such high-end services as business analytics and knowledge-based services through a mix of re-engineering skills, technology-enabled platforms, new operating models and increased depth of services, BPO exports are estimated to grow 6 percent to $12.4 billion (over Rs. 57,000 crore).
Why off- shoring makes more sense now?
Traditionally, cost rationalization was a compelling reason for corporates to consider outsourcing/off-shoring in the first place. Post the economic downturn, it came back to being an important reason for corporates to revisit their strategy for off-shoring and push it more aggressively.
With green shoots appearing in the economic scenario, proliferation of technology in various sectors and an increasing number of companies going global, Asia is witnessing a marked rise in IT spend. While Asia-Pacific constitutes about 10percent share of the total global IT services market, IT spend in the region is growing at a much faster rate compared to the mature markets. IT spending is a precursor to IT and BPO outsourcing and Asia-Pacific will attract increased competition, being the fastest growing geography with an estimated growth of 10 percent, according to a NASSCOM* report.
This year 2010, the key trends that will impact the industry going forward, to my mind are:
Markets in newer geographies
The U.S. and the UK have been a major revenue source for the BPO industry since the genesis of this industry. But now service providers are exploring markets in other global regions such as Europe, Australia, the Middle East and Asia Pacific. WNS on its part has channelized its initiative into three regions � 1) US 2) UK & Europe, 3) Asia Pacific thereby reducing its dependency in a single geography.
Such moves by service providers have come at time when potential customer base in these geographies has also seen a growth in maturity. It is without doubt that this year will witness aggressive moves by many service providers to tap this client base.
Expanding the global footprint
BPO service providers are building delivery centers around the world, often in newer nations, that provide a plentiful supply of educated but low-cost workers. WNS recently set up a delivery center in Costa Rica, which is not a conventional site for off-shoring, however it is strategic in terms of its proximity to the US. There has also been expansion of WNS's delivery centers in Philippines, Romania, Sri Lanka and India. This footprint provides clients tremendous flexibility in terms of cost, language capability, real time processing as well as access to Innovation networks driven by a partner.
Focus on mid-markets and SME's
The off-shoring option for the mid-market companies and the SME largely remains untapped. This could be probably because we have not reached out to the SME and the mid-market fraternity, to help them understand how we could be partners of profit in the long run.
KPO is another important segment through which we can tap the opportunities available in this space. SME's and mid-market companies largely depend on the trends that could help them in understanding the market better thereby create new business models to change their cost as per short / long term demands.
As we move forward, globalization is sure to intensify competition and this will encourage not only the large corporates but the mid-size companies and the SME's to revisit their strategy for off-shoring, push it more aggressively and thereby benefit in the long run.
