India Knowledge Process Outsourcing Industry expected to touch US$ 30 billion by 2015

India’s KPO market is expected to touch US$30 billion by 2015 from the FY2013 level of US$20 billion, which highlights the fact that KPO industry in India, continues to grow at a CAGR of about 30% annually, according to ASSOCHAM. India dominates the Global KPO industry as it controls the 70% market and industry is seeing good growth despite the economic slowdown that impacted the outsourcing industry as a whole. Growth in the Industry is fueled by demand for profession-based services in areas of research for capital & financial markets, legal works, editing jobs for international publishing houses, analytics, etc. KPOs has also other advantages like better work tools and processes, sophisticated client centricity, higher billing rates & more domain focused organizations. Currently the industry has more than 3.5 lakh professionals specialized in engineering, medicines, management and professionals in the field of accountancy, company secretary and legal fraternity but there still is huge demand for professionals as the industry still needs around 6-8 lakhs professionals by 2015.  Not only HR requirement is an issue but also the fact the KPO industry deals with highly confidential and secured data, India needs to work its data security and privacy laws. The KPO sector deals with confidential data, including financial data, treasury and cash management functions and investment portfolio decisions and needs to address the issue of data security raised by international clients, said Mr. Mr. D S Rawat, ASSOCHAM Secretary General.

Some of the KPOs in India are Evalueserve, Genpact, EXL Service, Copal Partners, WNS, PANGEA3, etc. Availability of highly educated talent, cost arbitrage, favorable government policies, Time Zone advantage, India has become the most attractive location for KPO. Companies like Bain & Co, Mckinsey & Co, Ernst & Young, and KPMG have their own knowledge centres in India. India’s professionals are proficient in KPO software like SPSS, SAS and MS Excel and well trained in advanced analytical, technical and interpretation skills. But industry is facing stiff competition from countries like Philippines, Russia, China, Poland and Hungary as these are emerging strong contenders for KPO business in view of qualified KPO professionals, low-cost advantages, domain expertise, location advantage, sales and marketing capabilities and data compliance, according to ASSOCHAM. Industry have to look at Tier 2 & Tier 3 cities where there is good talent available due to presence of good educational institutions and the companies can work closely with these institutions and train the talent accordingly. With high speed internet penetration, Tier 2 & Tier 3 cities are a good option for KPO Industry players and since KPO work can be done by individuals or small teams – remote work is also possible. KPO companies have to come up with working models that can tap into the isolated resources pools available in smaller towns across India, adds the ASSOCHAM. KPO industry growth will be driven by factors like breadth and depth of coverage, domain expertise, location advantage (e.g., near-shoring & language capabilities), sales and marketing capabilities, data compliance with respect to regulatory standards (especially of USA, Canada & the European Union) and the management of business risks, according to ASSOCHAM. The KPO industry has matured and the range of services being provided has expanded from research and analytics, to a variety of services, such as legal process outsourcing and clinical trial management.

India Business Process Management Industry 2013 – BPO Industry rebranding

NASSCOM, IT Industry Body in India is working to rebrand the Indian Business Process Outsourcing Industry to Business Process Management Industry which is a difficult task as it still needs to convince clients, job aspirants and other stakeholders. The BPO is often associated with low-end work night shift based typical call centres selling credit cards and insurance policies to foreigners. India's BPO services industry accounts for 38 per cent of the global market.But Indian BPO industry has moved away from this low end work to high end work involving analytics, MIS, Knowledge process outsourcing, legal process outsourcing, Healthcare and medical related work. This has led to the rebranding exercise by NASSCOM for creating a stronger image for Indian BPO Industry that will improve its identity as a full-service value provider that specializes in providing performance-based services.  India's BPM industry directly employs about 1.1 million people and this figure will touch 1.8 million by 2020. The sector is expected to grow to USD 50 billion by 2020 from USD 20.8 billion in 2012-13 fiscal at a compounded annual growth rate of 13 per cent, according to NASSCOM.

Global BPM sourcing market is currently valued at about USD 150 billion and India is expected to capture major share of this industry and Indian IT-BPO players are well equipped, as they have built the necessary technological expertise in Business Process as a Service (BPaaS), automation, IT-BPM interplay, etc. India’s BPM industry has changed its pricing models wherein it offers tailored pricing models like outcome based pricing model, according to client requirements, according to NASSCOM President Som Mittal. Already, the industry had moved to a non-linear trajectory. "The industry's growth from $18 bn to $20 bn was non-linear as people addition was far less compared to the normal course," according to Raman Roy, founder of BPM firm Quattro and who is regarded as one of the pioneers of India's BPO industry. Domain specialists in sectors like healthcare and retail will be the growth drivers for India's business process outsourcing (BPO) services industry, according to industry body NASSCOM. Nasscom president Som Mittal said the association was launching an outreach program that engages with various influencers, including academia and parents, about career options in the BPM industry.

Indian BPO Industry has been developing transformational outsourcing models that are more integrated with IT technologies and delivering clients huge value benefits and are also impacting the business outcomes of their clients. Higher end work in the areas of analytics, market research, MIS, customer relationship management, social media marketing, etc. and highly specialized work related to LPO, Healthcare outsourcing is also being outsourced to Indian vendors like Genpact, WNS, TCS BPO, Infosys BPO, HCL BPO, etc. Mergers and Acquisitions are also increasing as the Indian BPO players are looking to acquire new skills and technologies and offer them to clients that will not only increase their revenues but also increase their profitability. They are also establishing near shore development centers in Mexico, Brazil, etc and also in eastern European countries like Poland, etc. Indian BPO Industry has transformed into BPM Industry and looking to continue its growth trajectory. 

Verticalization in Indian BPO Industry 2012 – Top Vendors Vertical Strategy

BPO vendors like Genpact, WNS, etc. have adopted the verticalization strategy in the past couple of years and according to Don Schulman GM for F&A and Supply Chain Global Process Services at IBM, verticalizing the horizontal will be the next thing and quickly accelerating and is the key to the future for all the BPO services providers. All along Indian BPOs have been horizontal focused with service offerings like customer interaction and support, finance and accounting, procurement and human resources that are applied across different industry verticals. Nasscom estimates that horizontal services account for more than 70% of the Indian BPO industry.

According to Technology Business Research (TBR) report, Genpact vertical strategy focuses on key verticals like manufacturing and BFSI accounting for 33.3% and 41.9% of top-line revenue and other’s increased to 24.8% in 3Q12 from 22.8% in 3Q11 driven by life sciences, consumer goods and retail. During Q3FY2012, the company exhibited commitment to its vertically-aligned go-to-market transformation, indicated by front end headcount additions to its newly targeted vertical industries beyond the core. Business development leads boasting over 20 years of experience within their respective industries were added to Genpact’s life sciences, consumer goods, and retail businesses. TBR expects Genpact to hire additional experienced employees, including management-level hires, across industries through 2013 to beef up its expertise and gain vertical-specific clout.

WNS has introduced a completely new strategic orientation, by verticalization of the company around six areas and the company expects the restructuring to boost its revenues in the near future. Its businesses will be divided into six key verticals; with travel and insurance being the major focus verticals. Other verticals include shipping, logistics, healthcare, banking & finance and retail. It is also planning to restructure its senior management strategically to handle the new verticals which will function as a Strategic Business Unit (SBU) in order to achieve distinctive as well as overall growth. The company has also realigned the Go-To-Market strategy for each vertical.

Aditya Birla Minacs focuses on banking, financial services and insurance (BFSI), manufacturing, and telecom, media and entertainment verticals. BPO verticalization is forced upon them by Industry-specific customer preferences and goals and a new orientation in the way BPOs offer services offerings. For vertical specific offerings, the BPO services providers have to invest significantly in domain specific human resources and technology which is a major strategic both at the enterprise level  and also at the account level. Clients are looking for a higher level of domain knowledge and expertise in the Indian BPOs as clients want BPO service providers to partner with them and deliver work that will have direct impact on Client’s business. BPOs have to invest in building domain specific expertise and look to offer standardized product and platform based offerings along with customized offerings. Verticalization also helps the BPOs to effectively customize their offerings according to client needs.