Transformation from BPO to Business Process Management Industry, Indian BPO Industry facing tough competition and growth concerns in 2013

Indian BPO Industry has grown despite the global economic crisis, as evident from country's exports of the BPO sector which are expected to reach USD 17.8 billion in 2012-13 from USD 12.4 billion in FY 2010. According to NASSCOM, the Indian BPO sector still holds the global leadership position with 37% of the world's BPO market compared to 34% in 2009, despite the fact the voice based offerings have moved to Philippines and BPO revenues of Philippines are also on the rise.  The global BPO sourcing market has grown from USD 36-38 billion in 2009 to USD 48-50 billion in 2012. But the Indian BPO industry has lost its advantage and in the last five years, India has lost 10% share of the world's BPO (business process outsourcing) market to countries such as China, Philippines and Brazil. Not only these three countries, countries like Malaysia, Egypt, Morocco, Mexico, Chile, Columbia, Poland and Ireland are emerging as attractive destinations for voice contracts, which is also concern for Indian Industry but Indian Vendors have also setup their offices in almost all of the above mentioned nations baring a few like Morocco, Egypt and Columbia.

Indian BPO Industry has transformed from BPO to business process management (BPM) – from the basic voice services to cost cutting to finally delivering value based services that have significant impact on the client businesses and this has picked up since the year 2009. Indian BPO vendors are looking at products, platforms, social media, Analytics and Consulting projects for increasing their revenues and profitability and most of these are nonlinear revenues which mean the revenues are not directly linked to increase in headcounts. Non Linear revenues, outcome based pricing and projects that are of high in revenues and margins, are necessary for Indian vendors to survive in the market and for this and are setting up of multi-delivery centers, niche vertical offerings and end-to-end solutions using cloud, big data and analytics for their clients. The Indian BPO industry is well prepared for the tough market conditions and volatile economic conditions that are expected to continue in the current year. Indian BPOs are acquiring the companies that are specialized and having niche skills particularly related to healthcare outsourcing, analytics, cloud computing and big data.

Leading players in Indian BPO industry like Genpact, TCS BPO, WNS, Infosys BPO, HCL Tech, Wipro BPO and Cognizant BPO have all acquired companies in the past few years with only aim of acquiring new skills, technologies and capabilities  so that they can improve their product and service offerings to their clients. Not only acquiring companies the Indian BPO vendors have also realigned their management and organization structures focusing on key vertical industry segments so that they can service their clients in a better manner and increase their revenues and margins. Government of India is also encouraging the BPO sector by extending several incentives to increase the IT-ITES/BPO export revenue. Under the software technology parks (STP) scheme, IT-ITES/BPO units are eligible for various tax benefits such as customs duty exemption on imported goods, reimbursement of central sales tax and excise duty exemptions on procurement of indigenously manufactured goods. The Department of Commerce has notified 235 IT-ITES specific special economic zones. Currently, the SEZ units are eligible for tax benefits as per Section 10AA of the Income Tax Act for a period of 15 years in a phased manner. NASSCOM 2020 vision report also highlights the industry has a vision to garner revenues of $300 billion in seven years, up from $108 billion in 2012, and this growth will also imply heavy job creation.