Avendus has a report out on the domestic BPO sector. With the decline of the dollar and the expansion of the India domestic market in all spheres, could this be the next big opportunity?
Historically, the outsourcing market in India has been export focused and most participants have been focusing their energies in building businesses catering to US and European clients. However, with the emergence of India as one of the largest economies in the world, the Indian domestic outsourcing market is also emerging as an attractive target market.
To enable various participants of the outsourcing market to understand the Indian domestic BPO market better, we are publishing a report titled “Indian Domestic BPO Market – An Emerging Opportunityâ€.
While it is a US$1.8Bn market and expected to reach US$6Bn by FY2012 (CAGR of 35%+), we expect the third party segment of this market to grow much faster at 53%, taking the third party share from 18% in FY2008 to 30% in FY2012. Dominated today by call center activities from Banking, Telecom and Insurance, we expect this business to also show growing demand in the back office processing activities as the market and vendor sophistication grows.
Contrary to popular belief, the Indian domestic BPO business, despite its relatively lower pricing levels, has better (or at least equal) profitability margins as compared to the companies catering to global customers.
We believe the Indian domestic BPO market is a strong potential opportunity for both financial and strategic investors looking at making attractive investments in this space.
Last, but not the least, we also believe that the existing players in the Indian domestic BPO market will stand to gain from the years of credibility and referencibility they have built in this space, with the infusion of structured capital into this market.
- Mary Meeker’s 2014 Internet Trends report - May 28, 2014
- Andreessen-Horowitz raises $1.5B for its new fund - February 1, 2012
- WestBridge launches India “evergreen” fund - November 15, 2011
It is imperative for Indian companies to tap the domestic market now, just owing to the sheer size and future growth of the market. Also, this would help them reduce their dependence on Western markets.
Since cost arbitrage won’t matter, productivity and business value addition are the keys. Companies most poised to benefit from this are those with matured and standardized processes.
Can anyone help me in getting list of domestic bpos , we are a Dialer company and would like to target Domestic BPOs
write to sam (at) packet-shaper (dot) com
I could not agree more.
I am from a product company which supplies solutions to contact centers. There has been a dramatic increase in Domestic BPO requirements and quality.
People are looking at automation and process design in a more serious way then it was happening earler. So deepak rest assured Yochina would very soon have a integrated CRM and you will have a better experience. The great Indian consumer story is a truth and as customers demand more service providers have to deliver more.
Good times ahead.
Sachin Bhatia
Krish,
There is truth in your words but dont get too optimistic too soon. Cost arbitrage is here to stay. Munch on this …
Indian companies do not pay their BPO vendors well, though it is changing slowly, and only for a few. Neither do they care too much about quality if they can get barely acceptable service at a throwaway price. Only last night I ordered from Yo China, and the gentleman had no clue which outlet would serve my food (i requested a specific outlet since they serve the best). When I persisted he had a standard answer “I cannot divulge that piece of information, let me get my manager” … the manager did not come for over 7 minutes, thats when I disconnected and ordered again, this time without asking any questions 🙂
This is just the tip of whats out there. I do not mean to be critical, only realistic. Without disputing anything you have said, we still need some real re-engineering of the DNA to change things. What we have today is hardly 35% of what can be!
Deepak
Oh, what a relief…? Dollar depreciation had at least one good fallout. It wakes us up to opportunities in other currency areas including our own backyard. Did you say better be late….?
I’d rather India’s Third Party BPO vendors (“3p Vendorsâ€) get their act right for domestic clients than be smug and be fixated on margins, staging a re-run of the flawed practices they adopted with their overseas clients. With their expansive knowledge of the local markets, Indian vendors are best placed to deliver improved process automation and LOB consulting solutions to their clients yielding significant ROI boost to clients’ businesses. That way, they can shake down the world view that Indian 3p vendors mostly survive only by labor arbitrage and their processes are honed towards cost containment enabled by low end, high volume, repetitive tasks. Here’s their best opportunity to make amends and regain some credibility by telling at least their own countrymen that they indeed live up to their ROI commitments spelt out in SLAs in terms of high end deliverables too.
All while frequently looking over their shoulders and pace themselves ahead of IBMs and Accentures sniffing up from close behind. Sooner they recognize that it’s a race only amongst hares with no tortoises around, the better. May the fastest hare win.