BPOs keep their chin up

BPOs keep their chin up

New Delhi: BPO companies in India are looking at the current global financial crisis as an opportunity to do more business rather than a threat to their existence. This is despite the fact that they get the majority of their business from developed economies in the US and Europe. Even though BPO companies admit that they’ll be hit to some extent in the short-term, the medium to long-term prospect looks bright.

“Our belief is that business will increase substantially. Cost cutting and austerity drive will be new mantra. Overseas they’ll have to ensure profitability, they have to ensure that they meet targets and best way to do is to outsource" says Samir Chopra, president, Business Process Industry Association of India.

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96f978e8-9a08-11dd-940e-000b5dabf613.flvManoj Malhotra, CEO of Salient Business Solutions, adds that the financial downturn will make companies focus more on the bottom-line and therefore there is a greater opportunity for arbitrage.

The BPO industry generated Rs1,160 crore in revenue and employed seven lakh people in 2007-08. This slowdown, some feel, will be good, as it’ll help them focus better. Some are predicting a shift from offshore to domestic outsourcing, as companies look at mitigating and managing risks better. “We’ll see that domestic markets offer good opportunity, there are few players who have already started focusing on it, though the local outsourcing is not about cost arbitrage its about value arbitrage" says Praveen Sengar, senior manager, Software Services and Vertical Research, IDC India.

According to a study by his company, the domestic outsourcing industry is expected to grow to $11.23 billion by 2012 from $2.56 billion in 2007. But the BPO industry is expected to grow faster than the IT outsourcing industry in the same period. The domestic BPO industry size will be worth $6.67 billion by 2012, whereas the IT outsourcing will be at $4.57 billion.

Another way to counter the downturn is going rural. Karthik Raman of Source for Change, which is an all women rural BPO in Rajasthan says, “It’s natural, because cost of living in rural areas is lower than urban areas. You have this dual proposition, of having high quality product at a competitive price and a social advantage of empowering women."

Action in the rural BPO sector is already hotting up. A Tata group subsidiary engaged in the business of providing back-end support to group companies, has recently said it is planning to recruit 5,000 professionals for its rural BPO operations in the next five years.