Indian cos. wake up to BPO

"The domestic market in India is waking up to the business benefits that BPOs can offer and we are at the brink of a takeoff where there is availability of supply and adequate interest from the demand side. With over 40,000 people working on the domestic BPO side, it is the first steps. But everything indicates that only growth is possible in the area," said Prasanto Kumar Roy, president and chief editor, CyberMedia publications.

Speaking at IDC's conference on 'Technology Outsourcing: Aligning with the Opportunities' held during the second day of IT.Com 2004, Roy said that unlike IT services which have been outsourced by domestic players for sometime now, BPO has been slow both on the supply and demand side.

Most BPO suppliers have concentrated on making 'exports the holy grail' for themselves, demand has been low due to reluctance to outsource.

"With the government opening up domestic industry access to exporters as well, service providers are becoming interested in the domestic segment as it offers them a chance to use existing infrastructure which lies idle during the daytime. Also, there is a strong possibility of captive operations like Bharti's being spun off to address outside clients as well. That is the route followed by several global BPOs including Convergys and we could see similar directions in India. Big service providers are also beginning to target operations like Wipro Spectravision which is meant for the domestic market," said Roy.

He added that absolute margins or revenues from domestic BPO as opposed to export BPO remained low. While exports can bring in up to $10 per hour, domestic market offered only $3 per hour for comparative services. This acted as a deterrent for providers in addressing the domestic market.

Quoting the example of IBM's recent deal with Bharti, which involved the taking over of the latter's IT management in a $70 million, ten year deal, he said, "On the IT services side, it is rather interesting to note that there have been a large amount of deals that have been happening in the last two to three years. It is more interesting to note that these deals have been dominated by MNCs or the likes of IBM. Domestic IT service companies have concentrated on exports. Deals on the domestic side can start from simple AMCs to facilities management or even managed services, a lot of which still remain concentrated on hardware or network related support."

He further explained that the situation was changing, with more local players like Wipro and TCS taking part in pitching for IT deals from domestic players. Overall, he said, the outsourcing industry in the domestic market is healthy and set to grow in the near future, both in IT services and BPO.