They agree that in highlighting low service cost and cheap labour as the sole selling proposition will not be viable for any business to remain healthy. While pricing will remain important, but market indicators show that businesses will need to expand their services and capabilities for better margins. Explaining this, Pramod Bhasin, CEO, Genpact says, “Companies will need to take steps to extend their cost advantage as far as possible, while looking at growing from simple outsourcing to specific services and high-end deliverables. They will need to encourage their customers to outsource mission critical activities, risk mitigation jobs and core jobs. For this the BPOs in the country will need to upgrade their capabilities and skillsets.
The organisations are now ready to enhance their depth of services besides expanding their service offerings. The industry as a whole is now moving from the low-end voice based services towards high-end services that are data related processes. This is expected to make the companies more competitive in the global market and strengthen the industry’s revenue source.
Experts feel that the companies now need to build domain expertise and specialised knowledge. It is time they moved on to high-value services, which are knowledge based like research and development, analytics etc to derive high realisation and reduce competition. Vasu Ramaswami, CEO, CFC India says, “The time is ripe for the Indian outsourcing players to move up the value chain. They need to organise themselves into distinct business and allow expertise in certain core areas to be built. Then they should go out and offer these as value added services. This is the way money can be made in the next stage.”
According to Dr Manoj Vaish, president & CEO-India, Dun & Bradstreet, which recently published a book on the Indian BPO industry, till now major part of outsourcing was happening in the BFSI and healthcare segment, the companies now need to build vertical specific domain expertise to remain healthy. The emerging verticals that are expected to bring in fresh business for the players in the ITeS –BPO industry include hospitality, utilities, engineering, pharmaceuticals, life sciences, retail and manufacturing.
Another major trend is the birth of new delivery model, where the organisations are establishing presence in multiple locations to take advantage of the opportunities available in different geographies. This way they are reducing dependencies on single points of delivery thus de-risking their businesses. According to Sanjit Bal, director, business development, Convergys Corporation, this delivery model ensures strong service commitments and has been spurred by the latest spurt of merger and acquisitions in the BPO space both nationally and internationally. This has also led the ITeS BPO organisations to ramp up their operations quickly and expand into other countries, explains Bal.
Given the robust growth in the segment and strong market demand expected from the domestic market, it is important for companies to expand to tier II cities and tap the local talent pool. “By looking at tier II cities, big companies can expand quickly and take advantage of the lower cost of operations and availability of manpower,” adds Ramaswami. Till now the concentration of most ITeS - BPO companies have been in the metros like Bangalore, Mumbai, Delhi NCR and Hyderabad. But with increasing availability of skilled manpower cities like Chandigarh, Pune and Jaipur are gaining popularity. “To nurture and mature the talent pool available in the tier II cities, companies easily can shift their services that are process oriented in nature to smaller cities. For many companies it can be a strategic move to shift low-end data processing work to these less mature cities. This will ensure more job opportunities for the educated manpower in smaller cities and cost advantage for the companies,” concludes Bhasin.
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