Vertical focused BPO in demand

BPOs have constantly been horizontally focussing on services that can be offered across verticals of different industries. It is estimated that 70% of the Indian BPO industry focus on horizontal services. It has been observed that demands of the companies have been constantly changing and they now are looking for BPO companies which are vertical focused rather than horizontal focused.

2011 was a very good year for BPO as there was an increase in the number of deals worth more than USD25 million. There was an increase of USD29 billion in 2011 up from USD 22 billion in 2010. This increase is driven by Vertical BPO services according to Duncan Aitchison, Partner & President, North Europe, ISG. The clients now look for companies which can add overall value to their processes and not merely provide voice based call center services. This needs tremendous amount of domain knowledge from the service provider’s side. Opportunities are coming up in core banking, processing of mortgage, health care insurance etc.

According to Group CEO of Aditya Birla Minacs, Mr. Deepak Patel, vertically focused BPO is becoming increasingly popular especially in banking and insurance industries. Insurance companies are outsourcing their core processes like underwriting and banking companies are looking for help from BPO companies for decisions on disbursements of loans. This trend of vertical focus is also seen in the healthcare sector.

BPO companies in order to gear up for this challenge are taking the acquisition route if they find that they don’t have the domain expertise for vertical offering. The latest development in this space is acquisition of Headstrong by Genpact. Genpact made this acquisition so as to develop more vertical offerings in the health care sector. EXL Service Holding acquired Outsource Partners International which is a finance and accounting outsourcing service provider. There are other companies as well which are looking for acquisitions abroad for e.g. TCS, Tech Mahindra and Aegis. These BPO companies are looking for acquisitions in Eastern European countries and US which are known for good accounting and healthcare experts respectively.

Some companies are also trying to increase their expertise in house and as part of that is going for restructuring. Infosys BPO has recently put all the four verticals under one COO and the replacement of CEO Wipro also indicates that they are focusing on vertical offering. One another company which has gone for vertical focused BPO is WNS. They are offering services under different verticals i.e. banking and finance, retail, manufacturing, travel etc.

A survey done by SSON and Everest group indicates that vertical functions which are unique to an industry are slowly emerging though growth is still in the horizontal functions. Becoming vertical focused if going to be the point of differentiation between major BPO companies and they have to constantly engage in development of offering which is industry based. We can see that a small shift is happening in the BPO sector where companies are increasingly moving to offering vertical services. Indian BPO companies though have started this differentiation process; they still have a long way to go to compete with some of the giants in this field like IBM.




Latest Columns

BPO June 2012 News

Aegis launches Business Intelligence Suite, Aegis Pi Aegis Global, the leader in customer centre services with experience over 3 decades launched their Business intelligence Software suite, Aegis Pi. It will provide real time business solutions for its clients helping them in effective and quick decision making. This is their first foray into technology and software […]

Global Services Market Predictions for 2013: Everest Group

Everest Group is a renowned advisory firm that provides insight and strategic analysis for leaders of various global services. The group has helped more than 1000 firms to increase their efficiency substantially by organizing their services. Everest group counsels organizations with tough challenges needed to deliver international services and have laid out their predictions for […]

Speak Your Mind

*