Trend | Telecom | 02.06.2015
The ITeS-BPO industry has witnessed explosive growth in the past 5 years. The importance of this industry can be gauged by its contribution to the country’s GDP. The industry has grown manifold with the inclusion of newer verticals such as knowledge process outsourcing (KPO) and legal process outsourcing (LPO). This Research is by D&B.
Our insights are based on 214 companies providing an array of services — from primary services like data capture/management, customer care, technical support, order booking, content management, inbound/outbound voice processes etc to newer areas like business research, market analysis, litigation, strategy consulting, and legal research. Some key highlights of this study are presented below.
The top 10 ITeS and BPO companies employ around 40 per cent of the total employee base of respondent companies (198 companies for which data is available), as per the D&B study. The ITeS-BPO biggies comprise domestic as well multinational entities. Overall, 198 companies (for which information related to manpower is available) have a total of 3.9 lakh employees on their payroll.
All of the major players are offering customer care services and also have a presence in the finance vertical. This again highlights the fact that financial processing remains the most sought-after vertical and customer care remains the most preferred service offered by Indian ITeS players.
The high growth potential of the ITeS-BPO industry is attracting many multinational companies, domestic software conglomerates, and first-generation entrepreneurs — a trend spotted by the D&B India study. For instance, 54 per cent of the companies profiled in the publication were established after 2000, while 46 per cent of the companies came into existence before 2000.
Contrary to popular perception, Mumbai — the commercial capital of India — emerged as a preferred location for delivery centres for the ITeS-BPO industry, surpassing Chennai and Bangalore. As per the D&B study, 15.4 per cent of delivery centres are located in Mumbai, followed by Chennai (14.5 per cent) and Bangalore (13.5 per cent). Mumbai includes the adjoining areas of Thane and Navi Mumbai.
The services offered by ITeS-BPO companies are varied in nature. D&B India extensively studied over 30 service lines of the ITeS-BPO industry. Among the various services offered, traditional outsourcing areas like customer care, inbound/outbound voice, contact centre, e-CRM, and telemarketing services emerged as the most popular services, with 26 per cent share. The popularity of various services is calculated on a cumulative basis considering the services offered by the players operating in multiple service-lines. Data capture/management remained the single largest business line, with a 9 per cent share. On the other hand, document management, content management, and CBT/WBT content creation accounted for 10 per cent of total rendered services.
KPO services — a comparatively new entrant into the ITeS-BPO segment, encompassing market analysis, business research, strategy consulting, and retail analytics — made up 10 per cent of the services rendered by the surveyed companies. It was also found that the services offered in emerging domains like LPO, including litigation and legal processes, stood at 4 per cent.
Among verticals, the banking, financial services and insurance (BFSI) segment remains the most popular vertical for ITeS-BPO players, with share of 31 per cent. The popularity of verticals is calculated on a cumulative basis considering multiple verticals served by companies. The services offered by companies under the BFSI vertical cover traditional areas like card processing, cheque processing, insurance claims processing, and so on.
It is interesting to note that the retail and consumer segment, with a 10-per-cent share is fast catching up with ITeS-BPO service lines. Healthcare, with an 11-per-cent share, is another emerging vertical for the ITeS-BPO industry. The healthcare domain includes services such as medical transcription, health insurance, medical data processing etc. The telecom vertical, comprising services like inbound voice support, outbound voice support etc, continued to be one of the forerunners, with an 8-per-cent dominance in the verticals’ pie. The share of manufacturing and services & logistics verticals — which include e-CRM, customer care, telemarketing, auto parts manufacturing, equipment manufacturing etc — stood at 7 per cent each.
Among the key factors driving India’s dominant presence in the global ITeS-BPO arena is the high quality monitoring inherent in all the services provided. ITeS players have been focusing on quality initiatives and continuously working towards achieving and maintaining international standards. The survey reveals that out of the 214 companies profiled in the publication, 143 companies (67 per cent) have some kind of quality certification in the form of ISO and/or BS 7799. Also, various process certifications and compliance certifications — including SEI CMM, COPC, HIPPA etc — have been achieved by about 60 companies (28 per cent) covered in the publication.
The Indian ITeS-BPO industry has been growing at an impressive pace over the past few years and the trend is expected to continue, suggests the study. Third-party as well as captive players expect growth in the industry at more than 20 per cent in the next 2 years. In fact, growth would continue unabated despite concerns about the appreciating rupee, growing salary costs, and shortage of manpower etc.
As per the study, 35 per cent respondents feel that BPO will continue to be the biggest contributor to exports over the next 5 years, while 33 per cent respondents feel the same about KPO. In the meantime, LPO and e-learning are fast emerging as promising service lines, as per 9 per cent of the respondents, who believe that these are the service lines to focus on the in the next 5 years.
The current seat utilisation in the Indian ITeS-BPO industry is low at 1.3 — 101 companies have 107,472 seats and employ 139,095 persons. The industry can leverage existing capacities by taking on additional projects. For instance, few companies are actively pursuing domestic business to effectively improve seat utilisation. If companies execute domestic projects, it would also partially take care of fixed costs attached to BPO infrastructure.
The study provides an interesting insight vis-à-vis the major concerns faced by the ITeS industry. It is the continuously rising salary levels, and not the appreciating rupee or attrition rate, that emerged as the most pressing concern for the industry. In fact, a majority of the profiled companies rank rising salary levels as the major concern affecting or likely to affect future growth of the industry. This is followed by the rising rupee, a shortage of skilled manpower, and removal of tax sops. Labour attrition is ranked fifth. About 51 per cent of the profiled companies feel that the attrition rate will continue to be more than 20 per cent.