NASSCOM Research
The Impact of Global Change
on India’s BPO Industry
I read a book a few months ago called ‘The rule of three’, 5. Differentiation in service offerings is the *key*,
by Jagdish Seth and Rajendra Sisodia that examined viz. moving up the value chain and offering
patterns of market evolution in the context of radical specialised services
disruption that can occur when technology, regulation
It is also important to note that buyers are
or a new entry in the marketplace succeeds in altering
shifting focus from cost reduction to cost
the rules. In a nutshell, it described the phenomena
avoidance, value to value adds, revenue to risk
where three companies evolving over time dominate
sharing, performance to enhanced productivity,
any industry.
revenue management to hedging Forex exposures.
My feeling is that if all such disruptions happen at In the effort to manage cost and mitigate
one time, the magnitude of change may swing risk exposures, explicit contractual contingencies
through from companies to impacting economies. The are provided in the service contracts. Risk
current time is such — where the global slowdown, mitigation factors include not just Forex
collapse of commodity markets, geo-political risks, exposure but also:
the growth in the iPod culture, cloud computing,
green technology, sentiments of US on outsourcing, 1. Capacity levels, data security, flexibility in
job losses, etc., are all happening together, amidst approach of the service providers and not just
India’s attempts to sustain it’s dominance in the BPO meeting SLAs per se
market globally. 2. Prior direct experience and service providers’
It is surely a matter of concern today for us (the ability to expand or consolidate the supplier base
government, industry, professionals and institutions) 3. Supplier expansion or consolidation/
to resurrect policy frameworks regarding labour, rationalisation, which is being viewed as a
education, technology and legislation, and create means to gain economies of scale, reduce
an ecosystem that is best suited to sustain India’s overall cost and speedy implementation of new
leadership position vis-a-vis emerging competing efforts to meet the short-term demands
destinations. It is important that India maintains
its strategic advantage in terms of demographics, 4. Buyer behaviour, which is shifting away from
outsourcing experience, etc. project–based contract labour to long-term
formalised outsourcing relationships
At the same time, India must also recognise the shifts
taking place that are shaping new paradigms in the Business model transformation is now at a
BPO industry. These are: stage where the top companies in the world of
outsourcing are talking about a mix of domestic,
1. Outsourcing vendors are scouting business in
nearshore and offshore shared/captives
non-US regions and have a learning curve
besides hybrid models. It is now time to see
2. IT-BPOs with integrated delivery models offering high-end services getting outsourced to India.
scale and value will play for the long-term. Models Colt, Walt Disney, MGM, Warner Brothers and
of service delivery are evolving as nearshore, many others across the spectrum are betting big
home shore, among others on the Indian market.
3. Captive units are developing business from I would like to summarise the need by quoting Donald
external markets other than just serving their H McGannon who has famously said: “Leadership is
own businesses action, not position.”
4. A shake up is likely, as smaller undifferentiated Contributed by: Kazim Ali Khan, Site Head, Bangalore
BPOs will be negatively impacted. Smaller BPOs, & Head – Account Management – ITeS Business,
low-end commoditised services will face the heat Ma Foi Management Consultants Limited
June 2009 Newsline 11