New Markets, Acquisitions Drive India’s BPM Growth

by Sohini Bagchi    Sep 18, 2014

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The Indian Business Process outsourcing (BPO) sector which has been in the recent times rebranded as Business Process Management (BPM) is going through exciting times. With software industry body Nasscom projecting the sector to double its revenue to $50 billion by 2020 from the current $23.2 billion, industry experts believe that the growth will come from newer growth markets, acquisitions as well as high-end services like analytics and cloud.

These were some of the discussions at the Annual Nasscom BPM Summit, which stated that the rebranding to BPM has helped the sector position itself as a solutions provider, unlike the traditional models, which focused on customer service.

“Strong platform play and emergence of new markets has led to an exponential growth in the segment. BPM firms are focusing on transforming processes through use of newer technologies that’s creating newer business models,” said Nasscom president R Chandrashekhar at the summit.

Anantha Radhakrishnan, Sr. VP and Global Head of Enterprise Services at Infosys BPO  sees a shift from offshoring to near shoring, offering greater job opportunity to candidates in a specific geography besides offering time and cost optimization.

Read more: SMAC Is Changing The BPM Industry

Newer growth markets

Experts believe that while the US has so far dominated the sector with close to 60 percent of the revenue coming from market, firms are now looking elsewhere for growth.

As companies focus on diversifying their geographic base, BPM companies also expect to see markets such as continental Europe and Latin America will start contributing more to industry revenues. Moreover, acquisitions will play an increasingly important role for the sector, as the sector focuses on gaining new capabilities and growing revenue.

Companies such as WNS and EXL are already looking at the newer market for growth. Keshav Murugesh, chief executive of WNS told ET in an interview, “We already serve our global clients from centres in Europe. But now we look at positioning hunters in continental Europe to drive growth in specific verticals.” Likewise, EXL has reportedly created a joint venture with the Carvajal Group in Latin America, which will help the company set up units in five countries in the region. EXL chief Rohit Kapoor also hinted that acquisitions will play a key role particularly in looking at new capabilities.

Growth from smaller cities

To keep up the growth momentum, experts at the summit also said that BPM companies should explore the Tier-II and-III cities within the country.

Nasscom has come up with a joint report with advisory firm Cushman & Wakefield to identify some of the top destinations for BPM companies and found that in the last five years Ahmedabad, Jaipur, Kochi and Kolkata have significantly improved their value proposition for delivery of IT-BPM services. The report has identified Bhubaneswar, Coimbatore, Trivandrum and Visakhapatnam as the second choices while Chandigarh and Indore as promising locations.

Sanjay Dutt, MD, South Asia, Cushman & Wakefield states that strong infrastructure and top class office spaces have made it possible for such a transition. Despite this, shortage of skilled manpower continues to be a big problem, according to some and government regulations, such as lack of SEZs make it very difficult to set up operations in smaller cities.

Pockets of growth

Nasscom believes that with the tech landscape rapidly changing, from hardware, to enterprise software, to digital solutions, as companies continue to focus on process re-engineering and technology-enabled platforms, there are exciting growth opportunities awaiting this sector.

Analytics and healthcare will continue to be the two big growth opportunities for the Indian BPM industry. As BPM firms handle colossal amounts of data daily, advanced analytics can help them further get customer insight which in turn impacts their bottom line. Similarly, Nasscom suggests healthcare vertical is growing significantly, driven by Obamacare that aims at accessible affordable health insurance in the US. This can also offer huge opportunity for Indian BPM sector. Growth will also come from verticals such as retail, shipping and logistics, manufacturing and consulting and professional services.

Moreover, with India now becoming home to a new breed of startup companies focused on high growth areas such as mobility, e-commerce and other vertical specific solutions, there is enough scope for companies to create new markets and drive innovation in the coming years.