Consolidation wave likely in BPO sector: Gartner

With fast changing industry dynamics, the country's BPO sector is expected to see a consolidation wave in the coming months, says global research group Gartner.

"A consolidation wave in Business Process Outsourcing (BPO) sector is likely (in the coming months). Since it is challenging to cope with changing dynamics, some existing entities may move to different lines of business," Arup Roy, Senior Research Analyst at Gartner, told PTI.

The $12 billion Indian BPO industry is facing stiff competition from countries like the Philippines and the top 10 players account for about 75 per cent of the total market.

Besides, in recent years, as part of their competitive strategies, many domestic BPO players have been looking at broadening their service portfolios.

"BPO providers are aiming to differentiate services via broadening their service portfolios to provide end-to-end services, such as, source-to-pay, and through investments in technology for point solutions automation and business process utility services," a recent Gartner report said.

Roy noted that process management segment, which is expected to be worth over a billion-dollar in coming years, offers good business opportunities for domestic BPO entities.

"Process management (sector) is expected to see high growth. This segment will provide new revenue streams as well as cross-selling opportunities for many players," he said.

According to him, process management segment is expected to be worth about $1.7 billion by 2014 whereas this market was pegged at around $600 million in 2009.

On the other hand, Roy pointed out that BPO sector is facing challenges like rising wages and increasing IT costs.