BPO’s in emerging markets turn to technology for differentiation

November 17, 2011: According to a recent survey published by Gartner, the BPO market in India is estimated to reach $1.4 billion in the year 2011, a 23 per cent increase from the year 2010. By the end 2012 the market is estimated to reach a value of $1.69 million and by the end of 2014 it will reach a value of $2.47 billion. The important factors that are driving the adoption of outsourcing among the domestic market are changing demographics, increasing supply, and economic progress in the Asian region. In addition to India this scenario is witnessed in other countries such as China and Australia.

The BPO industry witnessed many mergers and acquisitions which led to the consolidation of the sector both in the regional and global markets, during 2009-2010. One of the main factors behind large merger and acquisition activities was the acceptance of BPO trend across the world and the trend is expected to continue in the years to come. The customer demand for integrated IT-BPO services are on the rise and in order to become full-service providers many of the pure BPO service providers are moving to mergers and acquisitions in order to meet the increasing demand of the customers.

A major trend that has aided the BPO industry to remain competitive edge is a shift in their positioning. Now they reposition themselves as technology enabled service providers rather than just being service providers driven by process.

There is a notion that more and more BPO service providers are setting up delivery centers in many of the emerging economies, but the truth about this notion is to be examined before jumping into any conclusions.

With the traditional markets becoming mature, the Indian outsourcing service providers are thinking of setting up delivery centers in emerging markets such as Philippines, Poland, and Middle East. One important driver behind this is the introduction of new processes and technologies, along with other factors such as near shore or onshore presence. The onshore presence of outsourcing service providers is required in the case of banking, financial services and insurance sectors, telecom sector etc. Such industries require service providers to take control of the clients operations.

In the case of BPO services offered by TCS, about 20 per cent of the revenue comes from Indian market, which is the major delivery center for TCS. So many other outsourcing service providers are also setting up delivery centers across various emerging markets with the help of new technologies and processes.

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