India Outsourcing Industry - Cloud based Platform offerings by Top Vendors

Indian IT-BPO vendors had realized that there would be demand for cloud services and had started building their own capabilities in order to survive the shift in demand and create innovative new models. Indian vendors moved a step ahead and started building platform based offerings that will be delivered by cloud. This means that cloud computing is standardizing the IT-BPO offerings by the Indian vendors and they have realized the cost and productivity benefits of standardizing processes. Clients too are interested in the standardized offerings and since such offerings are more outcome-based offerings that influence their business values. These cloud based platform BPO offerings are delivered through either public or private clouds or through the data centers.

Traditionally Indian vendors get nearly all of their revenues from the installation, customization and maintenance of software that is branded and created by mostly foreign software companies. There is huge cost and technology expertise involved in development of packaged software hence Indian vendors were more involved in migrating and maintenance. The cloud presents a different scenario for the Indian vendors where they can build their own platform and products and evolve from just migrating and maintenance to running the services for the customers. In cloud computing there is very little scope for continued services in a Cloud market. Cloud based BPO platform offerings present an opportunity for the Indian vendors to develop their own offerings and also helps in increasing the non linear and outcome based revenues that have more margins.

TCS focuses on owning the platform and the services, instead of simply being ‘helpers’ for other cloud brands and wanted to own the brand, the solution and the customer. TCS started wanted its cloud computing offerings generate nearly 10% of its new business together with product revenues over the next few years and planned  to offer standardized solutions across the areas of insurance and banking to multiple customers using same resources. TCS started its platform BPO unit in April 2008 and since then “had seen good traction in human resource outsourcing platform, and had created new platforms in select areas of finance and accounting procurement and analytics. TCS platform offerings have been successful and have seen good traction since last two years and it has seen good success in UK market. With over 30 customers, TCS currently has seven platform-based offering in its BPO unit and 25% of revenues come from platform offerings.

TCS iON - a cloud-based integrated IT solution for Small and Medium Business (SMB) and has already gained over 240 SMB customers who have benefited from increased efficiencies. TCS has already realized the traction for its 'bank-in-a-box' solution among smaller cooperative and rural banks. The solution, which helps these banks automate and integrate their processes of deposits and loans for a fixed monthly rental fee for each branch, already serves nearly 2,000 bank branches. Cooperative banks, including Andhra Grameen Vikas Bank, Uttaranchal Grameen Bank and Purvanchal Grameen Bank, are using TCS' 'bank-in-a-box' solution. Already, smaller organisations, such as Kaya Skincare, Oxford Book Store and Ryan International School, are paying TCS on per transaction basis as they seek to lower their costs of operation further. Non SMB cloud revenues are still at very low levels.

Infosys is banking on innovative cloud-based platform to facilitate client's customized needs and its BPO arm is aiming for $1 billion revenue by 2014. At Infosys Connect, the company introduced 15 Business Platforms under a newly created brand Infosys Edge, a family of platforms that enable customers to buy software on a pay-as-you-go model and offerings range from helping clients with e-commerce businesses to managing human resources and procurement processes. In second quarter of 2011 Infosys Edge signed ten strategic deals. Of these, four were from EMEA, four were from Americas and two were from the APAC region.  Some of the edge platforms are Infosys SocialEdge, Infosys CommerceEdge, Flypp (mobile application marketplace), TalentEdge, etc.

Infosys has about 2000 engineers dedicated to the Cloud products and platforms. Infosys is also building its own data centers in Australia and US and it is exploring the establishment of another in Europe to host new Business Platforms. The company is expecting about 50%-60% of workloads to shift on cloud in next five years, which may yield significant revenues for it. Infosys continues to see strong momentum with its Cloud practice having delivered over 125 engagements till date and The company is building concepts on edge platforms like for mobile banking, medical tourism, etc. It is offering also managing through the cloud the Aircel's Pocket Internet Store. Infosys tied up with Microsoft to provide cloud-based services to clients and will offer Microsoft Private Cloud solutions such as Windows Server Hyper-V and Microsoft System Center, and solutions on Windows Azure to clients.

Wipro is launched cloud computing services through its arm Wipro Infotech and it has around 25 customers. Wipro Infotech is selling two cloud offerings to SMBs – software as a service (SaaS) and infrastructure as a Service (IaaS). Customers are charged per user monthly price model and it has been selling the service directly so far and may start selling through channel partners from next year. Wipro Infotech has applications such as ERP, mail and messaging, human resources management system, dealer management system, hospital information system, vendor portal and learning systems on the public cloud offering and is targeting verticals such as manufacturing, automobiles, healthcare, the microfinance industry, textiles, and education. Wipro has gone in for a mix of self-developed and third party software. The dealer management system and vendor portal, for instance, is Wipro's IP.

Wipro has also offerings in other layers of Cloud including Business Process as a Service (e.g. loan origination as a service), Software as a Service (e.g. bank in a box with leading software vendors, implementation partner to leading SaaS vendors) and Platform as a Service (PaaS). Wipro leverages its Global Command Center (GCC) to provide a unified monitoring and management platform for private, public and hybrid Cloud environments. Wipro Technologies has built a private Cloud for OnStream Utility Metering Services Limited. Wipro is also partnering with other players like Microsoft, Oracle, Amazon, Citrix, etc and offering various platform based services to their clients on the partner’s platforms since 2009.

HCL Technologies announced in 2010 end that new technologies such as cloud computing will become nearly $300 million business over next five years, as part of the company's new initiative to incubate next big opportunities. It had formed a unit called 'ecosystem and business incubation organization', which had already identified five new ideas. HCL Infosystems launched  cloud computing based services branded ‘HCL O’Zone’ with an aim to offer end-to-end cloud based computing solution services to
its customers.HCL’s IaaS services are concentrated on the European and North American markets, with data centers in Sweden and New Jersey. The target market is HCL’s existing enterprise customer base, including a small number of industry-sector clients. Its offering includes standardized platforms for management, integration within a hybrid cloud environment, and a self-service portal and dashboard.  

HCL offers competency based services such as Cloud assessment, migration, implementation and maintenance. HCL has strategic partnerships & collaborations with leading players in the cloud ecosystem. HP has recognized HCL Technologies as the “AllianceONE Partner of the Year” in the category of HP Cloud Computing – Service Provider. Some of these include: Technology/OEM's Partnerships with Cisco, EMC, Vmware, Sun, Microsoft; IaaS: Amazon Web Services; PaaS: Salesforce.com, Microsoft Azure, Tibco; Cloud Management: BMC, CA.

Indian Vendors have realized cloud computing is essential for future growth and are investing in developing the various cloud offerings for the clients. Interesting fact is that instead of restricting themselves to the role of migration and maintenance they are more focused on developing their own brand of offerings and for this they are investing in data centers and technologies. They might be using the platforms, technologies and software of major vendors but they are developing service offerings use them but selling to the clients on their own brand name. Cloud product and services can be developed at a very low cost compared to packaged software and since cloud computing industry is at an evolutionary phase will definitely provide an opportunity for Indian vendors. All the vendors have created separate business units equipped with financial and thousands of human resources focused on creating products and platforms based on cloud. All of the vendors have developed their own IP product and platforms based on cloud and are aggressively marketing them to the clients.

Standardized offerings through cloud are also what clients are looking for as this comes with significant cost savings and no upfront technology investments. But clients have to be careful as there are some issues like data security, outages, contract complications and technology understanding. Cloud computing is expected to be a key offering for the Indian Outsourcing vendors for the non linear and outcome based revenues that have high margins and help these vendors move up the value chain. Platform BPO offerings is another segment where the vendors had been investing in development of platforms since past five years and they have been seeing success in terms of signing of platform deals since last two years. Vendors are also aggressively marketing the platform offerings to their clients and they are aiming for thirty percent of revenues from cloud and platform based offerings in next three to five years.

Sri Lanka Outsourcing Industry 2011 – Forecast 2015

The Sri Lanka IT & BPO industry is projected to grow by 26 % in 2011 with export earnings of $ 392 m in 2010. The industry has set a target of $ 1 b revenue with employment for 100,000 by 2015. This would mean doubling its current earnings of US$ 500 million during the course of the next four years .According to SLASSCOM the total software earnings of USD 294 million are produced by 27,000 people and on the BPO side, 13,000 people produce USD 98 million. There are nearly 300 IT/BPO companies like WNS, RR Donnelly, Amba Research, and HSBC currently operating in the island. The government is keen to provide favorable conditions to outsourcing companies so as to encourage investment, the industry has been granted a 12-year tax holiday. AT Kearney has listed Sri Lanka in its top 50 nations for outsourcing destinations, at 29.

According to ICRA Lanka report, The Information Technology (IT) industry in Sri Lanka includes the hardware manufacturing and software development sectors and the Information Technology Enabled Services (ITES), includes the Business Process Outsourcing (BPO) industry. The total size of the Sri Lanka’s IT market is estimated at US$386 million in 2011, and is expected to grow to US$742 million in next five years. Sri Lanka is not a significant exporter of IT services. The total exports of IT services in 2010 amounted to a little over US$300 million. Sri Lanka’s addressable computer hardware market is estimated at US$265 million in 2011, and is projected to reach around US$489 million in 2015, spending on software remains low, with the estimated addressable market of US$47 million in 2011 to US$98 million in 2015 and IT services spending is estimated to be around US$74 million in 2011 accounting for about 19 percent of Sri Lanka’s total spending on IT to US$155 million in 2015.

Sri Lanka is becoming an attractive location for 'Finance and Accounting Outsourcing' (FAO) with the world’s second largest pool of management accountants and wages lower than India. This according to SLASSCOM which has published an industry report on the FAO sector in Sri Lanka prepared by PricewaterhouseCoopers and sponsored by Association of Chartered Certified Accountants. Sri Lanka has the second largest pool of qualified CIMA (Chartered Institute of Management Accountants) members outside UK. It also has about 80, 000 accountants in training. Global companies, including UK Accounting and Legal Services Center of WNS, Investment Research Center of Amba Research, UK Banking Center of HSBC, and Finance & Accounting Center of RR Donnelley, have set up their delivery centers in Sri Lanka. Also higher education in accountancy is offered by five main professional accountancy bodies, 15 state universities and numerous foreign affiliated private universities operating in the country.

To achieve the one billion dollar target Sri Lanka IT-BPO industry has to improve its infrastructure, and the English-speaking population. Sri Lanka provides a good opportunity to cut costs but there is a shortage of supply of skilled and qualified graduates particularly in the IT field. With the US economic slowdown and European debt crisis, there is a possibility that the IT- BPO industry in the country may slowdown. Most of the work done here is done for US and UK clients. With support from Sri Lankan government the Industry is looking forward to achieve the billion dollar revenue target.  

India Outsourcing Industry 2011 – Focus on Healthcare vertical for Growth

Healthcare has become focus vertical for majority of the Indian IT Vendors. Most of the IT/BPO companies like Cognizant Technology, WNS, TCS, Firstsource Solutions, Genpact, Mahindra Satyam, Pacific BPO, CBay Systems, etc already cater to global healthcare industry. Infosys is looking at Healthcare vertical as one of the critical vertical for future revenue growth. Indian IT vendors have been slow in tapping this vertical as major focus earlier was on BFSI and Manufacturing. Indian IT vendors are making use of technology as a platform and offer their service offerings.

US is major market

US healthcare reform announced by President Obama provides a huge opportunity for Indian IT vendors and the policy focuses on controlling healthcare costs and provides universal coverage. The US healthcare bill, valued at US$ 940 billion, will provide healthcare coverage to 32 million Americans over the next 10 years. Currently US healthcare is estimated at $2.5 trillion, which is projected to grow to $4.6 trillion by 2020. Major opportunity for Indian Outsourcing vendors lies in revenue cycle management, electronic medical/health records (EMR/EHR), billing & coding and medical transcription. According to ValueNotes, EMR/EHR is a $20 billion IT outsourcing opportunity. Revenue cycle management (RCM) is a $50 billion market in the US.

Medical transcription business is estimated to be worth $25 billion annually and growing at around 15%. According to CBay Systems the size of the US medical transcription (MT) industry is estimated to be approx. US$17 billion for the year 2011 and is expected to reach US$21.2 billion by 2014. 67% was in-house while the remaining 33% was outsourced. CBay also expects the MT industry in India is expected to touch US$1 billion in 2014 from US$ 435 million in 2009. According to ValueNotes, the MT boom phase is over. Speech recognition technology, being used by most healthcare providers has resulted in shrinking the requirement of a medical transcriptionist’s skills to 10-15% of its original requirement. Medical transcription started in India 15 years ago and India is one of the primary locations and there are number of companies providing end to end medical outsourcing services in India.

Rising Indian Domestic Healthcare Sector

According to a report titled, “India’s New Opportunities- 2020” prepared by the All India Management Association, Boston Consulting Group and the Confederation of Indian Industries (CII), the Indian healthcare sector is poised to reach US$ 280 billion by the year 2020, thereby contributing an expected Gross Domestic Product (GDP) spend of 8 per cent by 2012 from 5.5 per cent in 2009. A US$ 36 billion industry in 2009 and growing at 15 per cent compound annual growth rate (CAGR), the Indian healthcare industry will reach the market value of US$ 280 billion by 2022. Indian IT vendors have to look for growth opportunities domestically as the US and European Markets are struggling to overcome the economic slowdown and European Debt crisis. The domestic opportunity may not offer huge profit margins as healthcare in India is mostly government owned but the rising private participation and Public and Private Partnership model is a good sign. State governments across the country have announced specific healthcare schemes sponsored by them for citizens and these schemes need to be monitored and properly implemented.

Indian Top IT Vendor focus on Healthcare Vertical

TCS has started looking at the healthcare vertical since 2009 and has seen annual revenues of US$ 395million in the vertical in 2010. TCS’ Q1 2011 Healthcare and Life Sciences revenue was at US$ 119 million. TCS has been gaining traction in this vertical.

Infosys does not report the healthcare revenues separately which highlights the fact that the company does not have much exposure in this vertical. To overcome this, company is looking for acquisitions in this vertical in US and Europe. Market rumors indicate the company is looking to acquire the Thomson Reuters Health Care vertical business in US.

Wipro healthcare vertical revenues for 2010 were US$429 million. Wipro is looking at healthcare as momentum vertical for growth and is planning to expanding its relationship with seven existing healthcare clients and looking to add at least two new clients on a quarterly basis.

Cognizant is the undisputable leader in healthcare market with more than US$ 1.17 billion in revenues. Cognizant owns IMS Health, which has a strong base in the healthcare practice. Cognizant provides solutions to 27 of the top 30 pharmaceutical companies; nine out of the top 10 biotech companies; nine out of the top 10 US health plans and 12 of the top 20 medical devices companies.

HCL technologies annual revenues from healthcare vertical in 2010 were US$252 million. Healthcare Informatics’ magazine has ranked the ‘Healthcare Practice’ division of HCL Technologies as the 39th largest healthcare company by revenue in the US in 2011.

Smaller players in the market like Firstsource, Genpact etc and pure play MT players like CBay, Pacific BPO also are focusing on Healthcare BPO market. These players have realized that the growth lies in the other than MT market i.e. Revenue cycle management, electronic medical/health records, and coding. These players are also competing with the bigger players in the market for the revenue share.

Healthcare vertical – Growth Driver

Indian IT vendors have to look for growth opportunities in healthcare as the US and European Markets are struggling to overcome the economic slowdown and European Debt crisis and the growth drivers till now BFSI & manufacturing verticals are slowing down due to the slowdown and debt crisis. Apart from the US healthcare policy, healthcare spend is also expected to increase in UK and India which also presents a growth opportunity. Mergers & Acquisitions are expected in this vertical as many big players in the Indian IT industry like Infosys are looking to acquire for jumpstarting revenues in this vertical. Other players like TCS, Wipro and HCL are focusing to increase their presence in this vertical and planning to add more clients in the coming quarters.

The ICD 10 conversion change by October 2013 is expected to impact the medical coding industry and is likely to spur a great demand for outsourcing and most of it may come to India. Technology helps in providing integrated solutions for the client’s healthcare needs, decrease healthcare costs, and improve efficiencies and Indian IT vendors with long experience in using such technology platforms are in a good position to provide the necessary services to the healthcare industry.

India BPO Industry - 2011 Focus & Growth Areas

Indian BPO Industry Focus 2011


Consolidation in the market and increased market activity. Large players buying small players.

BPO industry is rethinking its strategy for growth and moving towards BPO 3.0. BPO 1.0 was built upon cost efficiencies/productivity; BPO 2.0 focused on greater breadth and depth while embracing the ‘globalization’ of delivery capacity. BPO 3.0 will focus on value enhanced end-to-end solutions, inclusive growth, and tier 2/3 towns.

BPO companies are also facing the threat of losing business to large IT companies which offer integrated IT-BPO services. To counter this, standalone BPO companies will have to offer IT services like enterprise application support, remote infrastructure management (RIM), application development and management (ADM) and business intelligence, to maintain their competitive edge, say industry observers.