BPO Sector in Next 5 Years

Since its inception in the 1990s, Business Process Outsourcing sector, more popularly known by its acronym, BPO, has been creating millions of jobs around the world. Many countries in the emerging world such as India and Philippines have been transformed by this industry. 

Over the past decade, India’s BPO industry has seen remarkable growth employment and revenues have expanded several folds. The BPO industry has expanded at a CAGR of 13.7 percent over 2010–16. 

Market size of BPM industry in India is estimated to rise from $ 41 billion in 2020 to $ 54 billion by 2025. BPM accounted for 22.63 per cent of total IT exports during 2016. Currently, IT and BPO sector employ 4 million people in the country. With a large pool of English speaking and talented graduates, India is one of the top destinations to offer BPO services for international clients. Today the country has a very mature market with vendors offering services across the entire BPO value chain.

Indian employees are particularly attractive to BPO employers. The reason is not far to seek. They are fluent in speaking English. 

However, this growth cannot go on forever. The trend of BPO moving towards automation is one of the challenges faced by the sector. Add to this the traditional challenges faced across the BPO industry such scarcity of well-trained employees, high attrition rate and pressure to maintain profit margins.

Not just BPO – the rise of KPO

Changes are taking place in the BPO world on a fast pace. In order to not be left behind it is in the essential fitness of things that India focuses its close attention to trends that have the potential to alter the industry. If the BPO sector fails to keep pace with the fast changing BPO landscape, it could well find its BPO growth declining further.

Thanks to the rise in the demand for non-voice and high-quality services, Knowledge Process Outsourcing (KPO) is gaining momentum. KPO is defined as the outsourcing of core data-based business processes to another firm. 

The KPO sector is seeing strong growth in India, where it has been easier to find the highly qualified employees needed to work in this new industry. The worldwide KPO market is estimated to grow at a CAGR of 23.12 percent from 2013-2018.

The Indian government has already recognized the trend of gradual shift from BPO to KPO. As a result, KPO’s share of the market is steadily increasing in the country and some of the world’s largest KPO service providers, such as Goldman Sachs, McKinsey, UBS, J.P. Morgan and AIG, are already operating in the country.

Finance related work has the largest opportunity in a BPO firm. Presently services related to BFSI about for about 35% of the total outsourcing market in India. BSFI segment is expected to contribute to 55 per cent of the total BPO market in the next five years. According to the estimates by NASSCOM, vertical- or industry-specific services in BFSI have been witnessing growth rate of about 20% CAGR for the last 3-4 years, which is much faster than the generic BPO services like F&A. 

BPOs have saturated in most of the metro cites in India. Smaller cities are ideally suited to be next BPO hubs. Needless to say, they would be expanding into the Tier II cities such as Jaipur, Pune and Chandigarh. India will face stiff completion from Philippines.

High growth in the BPO industry in the next five years will result in the expansion of the companies looking for larger requirements. Robust growth in the sector will lead to increased M&A activity. A large number of Indian companies will be looking towards expanding their operations by setting up offshore delivery centres across the globe. Many of the BPO firms will venture into the KPO domain.

Growth in the next five years will be driven by an increase in demand for non-voice services. To remain high in the curve the BPO firms will have to hire, train and re-skill their employees. India has to be rebranded as a global BPO hub. If government reforms continue, the future of BPO in India seems bright while the naysayers will always paint a gloomy picture. 

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Struggles of our Life

Once upon a time a daughter complained to her father that her life was miserable and that she didn’t know how she was going to make it. She was tired of fighting and struggling all the time. It seemed just as one problem was solved, another one soon followed. Her father, a chef, took her to the kitchen. He filled three pots with water and placed each on a high fire.
Once the three pots began to boil, he placed potatoes in one pot, eggs in the second pot and ground coffee beans in the third pot. He then let them sit and boil, without saying a word to his daughter. The daughter, moaned and impatiently waited, wondering what he was doing. After twenty minutes he turned off the burners. He took the potatoes out of the pot and placed them in a bowl. He pulled the eggs out and placed them in a bowl. He then ladled the coffee out and placed it in a cup.
Turning to her, he asked. “Daughter, what do you see?” “Potatoes, eggs and coffee,” she hastily replied.
“Look closer”, he said, “and touch the potatoes.” She did and noted that they were soft.
He then asked her to take an egg and break it. After pulling off the shell, she observed the hard-boiled egg.
Finally, he asked her to sip the coffee. Its rich aroma brought a smile to her face.
“Father, what does this mean?” she asked.
He then explained that the potatoes, the eggs and coffee beans had each faced the same adversity-the boiling water. However, each one reacted differently. The potato went in strong, hard and unrelenting, but in boiling water, it became soft and weak. The egg was fragile, with the thin outer shell protecting its liquid interior until it was put in the boiling water. Then the inside of the egg became hard. However, the ground coffee beans were unique. After they were exposed to the boiling water, they changed the water and created something new.
“Which one are you?” he asked his daughter. “When adversity knocks on your door, how do you respond? Are you a potato, an egg, or a coffee bean?”
Moral: In life, things happen around us, things happen to us, but the only thing that truly matters is how you choose to react to it and what you make out of it. Life is all about learning, adopting and converting all the struggles that we experience into something positive.

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