Category Archives: BPO reports

Reports from leading sources on the growth of BPOs in India.

BPO industry’s growth

This is an excerpt from the leading daily "The Times of India". It provides an insight into the growth of the BPO sector.

"The Indian software and BPO segment will grow at a rate of more than 16 per cent to become a 132 billion-dollar industry by 2012, global infotech analyst International Data Corporation said on Wednesday.

"The India domestic IT and ITeS market is expected to cross the Rs 2,00,000-crore (50 billion dollar) mark in 2012. This translates into a CAGR of 18.4 per cent in the five-year period. It was Rs 90,014 crore in 2007," IDC said.

Together with IT and ITeS, and exports revenue of Rs 3,20,278 crore, the total IT and ITeS industry would grow to Rs 5,29,976 crore (132 billion dollar) by 2012, representing a growth of 16.5 per cent, said IDC.

Exports continue to be the biggest segment at Rs 97,492 crore. In 2008, IDC expects the IT and ITeS industry to grow at 20 per cent, with the domestic market growing at 22.4 per cent.

The overall industry is projected to be of the size of Rs 5,29,976 crore, or 132 billion dollar, by 2012-end, with the share of domestic IT and ITeS revenues being 40 per cent of the total compared to the current 37 per cent.

The IT and ITeS exports market is likely to more than double to Rs 3,20,278 crore in 2012, IDC claimed.

In 2008, IT and ITeS exports segment is expected to clock a growth of 20.4 per cent to touch Rs 1,86,142 crore. "The domestic IT and ITeS industry CAGR of 18.4 per cent (during 2008-12) is expected on the back of a robust growth of the past five years (2003-2007), IDC India Country Manager Kapil Dev Singh said.

The Indian IT and ITeS industry grew to Rs 2,46,609 crore in 2007 from Rs 2,01,413 crore in 2006, representing a growth of 22.4 percent."

Stamping the authority

The BPO industry is here to stay. In a series that I would start now, I would publish news from leading english dailies that proves this fact and would also give you a fair idea of the magnitude of growth that his industry is expected to grow at.

A reader of my blog said once that I state with such authority that the BPO industry is indeed here to stay but what proof do I have to establish the fact. This series of articles is a response to this question.

An excerpt from the Times of India dated 1st May 2008, Delhi Edition:

NEW DELHI: The Indian software and BPO segment will grow at a rate of more than 16 per cent to become a 132 billion-dollar industry by 2012, global infotech analyst International Data Corporation said on Wednesday.

"The India domestic IT and ITeS market is expected to cross the Rs 2,00,000-crore (50 billion dollar) mark in 2012. This translates into a CAGR of 18.4 per cent in the five-year period. It was Rs 90,014 crore in 2007," IDC said.

Together with IT and ITeS, and exports revenue of Rs 3,20,278 crore, the total IT and ITeS industry would grow to Rs 5,29,976 crore (132 billion dollar) by 2012, representing a growth of 16.5 per cent, said IDC.

Exports continue to be the biggest segment at Rs 97,492 crore. In 2008, IDC expects the IT and ITeS industry to grow at 20 per cent, with the domestic market growing at 22.4 per cent.

The overall industry is projected to be of the size of Rs 5,29,976 crore, or 132 billion dollar, by 2012-end, with the share of domestic IT and ITeS revenues being 40 per cent of the total compared to the current 37 per cent.

The IT and ITeS exports market is likely to more than double to Rs 3,20,278 crore in 2012, IDC claimed.

In 2008, IT and ITeS exports segment is expected to clock a growth of 20.4 per cent to touch Rs 1,86,142 crore. "The domestic IT and ITeS industry CAGR of 18.4 per cent (during 2008-12) is expected on the back of a robust growth of the past five years (2003-2007), IDC India Country Manager Kapil Dev Singh said.

The Indian IT and ITeS industry grew to Rs 2,46,609 crore in 2007 from Rs 2,01,413 crore in 2006, representing a growth of 22.4 percent.

If this is not enough proof we would read many more such articles in the days to come which would stamp the authority of the BPO industry.

BPO – Growth expectations

The below excerpt is from a news published in the Times of India, dated 29th January 2008 and this speaks loads about the expected prospects of the BPO industry in India.

“The Indian BPO industry has the potential to grow five-fold in the next five years to become worth $50 billion. What’s more, the sector can add 2.5% to India’s GDP from exports and provide direct employment to nearly two million people. It will also boost growth in Tier-II and III cities to support the six-fold growth in the number of delivery centres.These are some of the latest findings of the Nasscom-Eversest Group study. The study, “Roadmap 2012 – capitalsing on the expanding BPO landscape”, predicts a five-fold growth in the Indian BPO sector will bring about huge payoffs to India’s economy, employment and development as a whole.”There is a lot of opportunities out there but it will depend on the BPO player on how they want to play it out”, says Gaurav Gupta, Country Head, Everest Group. The study shows, the cost-base offshoreable to India and addressable by the Indian BPO industry is worth $220-280 billion. Interestingly, while the Indian BPO sector has been focused more on exports, the domestic opportunity too has been evolving and growing fast. The report reveals the domestic BPO market which had a growth rate of 50% over the last five years has grown faster than the overall Indian BPO market to reach nearly $1.6 billion by 2008. And there are opportunities galore from sectors as varied as banking, retail, insurance, media, telecom and government ec. These together could generate an additional $15-20 billion worth of business”.

If there are still people who have doubts about this industry, I would recommend them applying for some government jobs and enjoy the life there.

ITES-BPO rankings

Genpact has earned the top slot in the top 15 third party ITES-BPO companies, as per the annual NASSCOM survey. The rankings are based on the revenues for 2006-07 reported as per the annual NASSCOM survey on IT industry performance. WNS Global Services is at the second spot and Transworks emerged at the third position, up from 15 last year.
In FY 07, the Indian ITES-BPO segment grew by 33.5 per cent per cent contributing $8.4 billion to the total software and services exports of $31.4 billion. According to Kiran Karnik, president, NASSCOM, “The ITeS-BPO segment continued to grow at a scorching pace, to record export revenues of $8.4 billion in FY07. We expect segment revenues to grow at around 30 per cent next year, to clock exports of $10.5-11 billion in FY08.”

While talking about the growth of the Indian BPOs, Karnik said, “The Indian BPO sector has witnessed significant transformation over the past decade. Starting with basic data entry tasks, it now includes increasingly complex processes. The domestic market has also contributed to the growth of the segment as a whole and we expect on-going momentum considering the large addressable market that it offers. Overseas M&A, along with increase in scale and depth of existing service lines, has complemented the growth of this segment.”

Finance and accounting (F&A), customer interaction services (CIS) and human resource administration (HRA) showed a steady growth. ITES-BPO employee base jumped to 5,53,000 in FY 07 from 4,15,000 in FY 06. The domestic market for ITES-BPO grew to $1.2 billion in FY 2006-07 from $0.9 billion in FY 2005-06, showing a significant increase in demand.

Top 15 third party ITES-BPO companies in India are as follows:
1. Genpact
2. WNS Global Services
3. Transworks Information Services
4. IBM-Daksh
5. TCS BPO
6. Wipro BPO
7. Firstsource Solutions
8. HCL BPO
9. Infosys BPO
10. EXL Service Holdings
11. Citigroup Global Services
12. Aegis BPO Services
13. HTMT Global Solutions
14. 24/7 Customer
15. Mphasis BPO

The NASSCOM rankings

NASSCOM Top 20 software and services exporters in FY 2006-07

Methodology for ranking
NASSCOM sends out a detailed Snap Survey questionnaire annually to all its member companies, accounting for 95 percent of the Indian IT software and BPO industry revenue. Information collated through the questionnaire includes: aggregate performance; service lines; verticals and geographies. The Snap Survey form also takes into account the contribution of the 100 percent owned overseas subsidiaries after deducting all the double accounting.

Rankings

Key highlights of the NASSCOM survey

1). Industry employee base estimated at nearly 1.6mn in FY07

  • Employment in the exports segment estimated at over 12,00,000 which translates into a year-on-year increase of ~34%
  • IT software and services added over 177,000
  • ITES-BPO added ~138,000
  • Indirect employment attributed to IT-ITES estimated to be 4x, translating to ~6mn additional jobs

2). Industry performance

  • Exports grew by over 33% – was the main factor in the industry performance exceeding expectations
  • Year marked by scope and scale expansion
  • India is an integral part of most major global sourcing strategies
  • Increasing traction in application management and infrastructure services
  • Strong growth in FAO demand; steady expansion in emerging service lines (legal, risk management)
  • Overseas M & A complementing organic growth

3). Market indicators support a positive outlook for global IT-BPO demand

  • Large unaddressed market potential for global sourcing
  • Continued momentum in new contract signings, renewals / restructuring
  • M & A activity in key client industries / PE activity to drive new opportunities; focus on mid-market
  • Concerns of US economic recession moderating, corporate performance and outlook is positive

4). India continues to maintain its distinctive lead as the destination of choice on parameters like talent suitability, maturity and business environment

  • 28% of the suitable talent available across all offshore locations
  • Outranks the next destination by a factor of 2.5
  • Broad service portfolio
  • Keen emphasis on security, quality
  • Leveraging the experience curve to derive gains from operational excellence
  • Rupee appreciation a concern

5). Six key focus areas for sustained leadership have been defined as

  • Enhance the talent pool advantage by focusing on soft skill development
  • Rapid growth in key business infrastructure strengthening -plan for emerging cities and aim for proactive regulatory reform to facilitate business in India
  • Operational excellence to be driven amongst industry players to ensure world leading benchmarks in performance in India based delivery model
  • Catalyzing domestic market development
  • Emphasis on quality and information security
  • Fostering an ecosystem to breed innovation

6). Projections for FY 2007-08 estimate overall software and services to grow by 24-27% to USD 49-50 bn

  • Lower growth rate masks the fact that incremental revenue of $10 bn is higher than ever before
  • Exports growth projected at 26-29%; IT software & services $28-29bn; ITES-BPO $10.5-11bn
  • Domestic market growth forecast at 20-22% with transportation, retail, hospitality to supplement strong demand in financial services & telecom