Thursday, January 27, 2011

Consolidation is the buzz in BPO sector

Indian BPO sector is swirling in consolidation waves as a result of fast changing industry dynamics. According to research analysts, consolidation will likely hit the business process outsourcing sector in the coming months. Some of the companies are already planning to move to different business lines since they face some bottlenecks to cope with changing dynamics. The $12 billion Indian BPO industry has been facing stiff competition from countries like Philippines, say analysts.

Recently, many of the domestic BPO companies have been broadening their service portfolios as part of their competitive strategies. Report suggests that BPO providers are aiming to differentiate services via broadening their service portfolios to provide end to end services. Also they are utilizing investments in technology for point solutions automation and business process utility services.

The process management sector is expected to see high growth as it offer good business opportunities along with cross selling scopes for domestic BPO entities. Moreover the sector is expected to be worth over a billion dollar in the coming years. According to analysts, the process management segment is expected to be worth about $1.7 billion by 2014. However, challenges like rising wages and increasing IT costs have been choking the BPO sector lately.

Friday, January 21, 2011

Business Process Outsourcing industry to glow in 2011

We have seen the growth of Indian BPO industries in the recent years. Even though the industry has matured from offering non core activities, there is a huge global market that is yet to be explored. Since the domestic and export sector in India constitute to 5% of worldwide technology products and services related spend of USD 1.5 trillion in 2009, the level of growth opportunity is distinctively high (myiris). Hence with innovative service models, the BPO industry in India can broaden its geographical reach and spectrum.

For widening their service offerings, BPO industry has adopted the inorganic growth route and thereby entering new geographical markets. Consolidation is taking a new dimension with many third party and captive BPO units acquiring small size companies to ramp up revenue, acquire clients and expand business segments and geographical reach. This trend is expected to continue in the near future mostly by the robustness of the Indian players.

Since BPO companies in India are focusing towards a market shift, they are changing their business from core markets like UK and US as these markets face a slow down owing to global recession. Indian companies have begun exploring markets like Australia, Netherlands, Philippines and Brazil. Even though these markets are just flourishing, they are expected to grow in future. Moreover by focusing on different regions, there are less market risks even.

Geographical shift is not confined to markets but even the delivery centers are moved toward rural areas in India. Due to lower cost of operation and growing real estate construction in rural areas, many companies are setting up their centers there. Furthermore they are also moving up the value chain in terms of service offerings from data management tasks to content creation and validation.