The Indian BPO industry has achieved tremendous growth in recent past. Will the industry be able to sustain its growth rate in future? By December 2006, the $6 bn-plus Business Process Outsourcing (BPO) industry, which is also Indias fastest growing industry, will complete 10 years of its existence. The BPO industry has been experiencing pathbreaking success and its share in the global market for ITES and BPO services stands at 44% with $28 bn revenue in 2004-05 against the total global market worth of $40 bn. The scenario, however, is not as rosy as it looks. Akin to any other industry in its growth phase, the BPO industry is also going through its share of turbulence. The growth has been very spiky which has added to its troubles.
As the industry comes of age, customers are constantly focusing
on quality of products and services. The old business models
are no longer sufficient to cope with the growth. As the industry
matures and consolidates, it's grappling with challenges allied
to managing growth and combating competition. It needs to
get more disciplined in managing key issues like attrition,
people development, wage inflation, infrastructure, moving
up the value chain, and more importantly, implementing and
executing robust security processes to ensure safety of client
and customer data.
The
word outsourcing has its origin in the "competitive
advantage theory" promulgated by Adam Smith in his book
The Wealth of Nations. Gradually with time, the meaning
of the term outsourcing underwent a sea change. Initially,
the term "outsourcing" was used during the industrial
revolution, when countries shifted their manufacturing base
to countries providing cheap labor. But the term has an entirely
new connotation in today's scenario.
Despite
the BPO industry's recent entry into the Indian scene, it
has grown phenomenally within a short span of 10 years, and
has now become an important part of the export-oriented IT
software and services environment. Zia Shiekh, CEO of Stream
Asia-Pacific, opines, "It's been an amazing 10 years,
especially considering the fact that the third-party BPO/call
center industry really kick-started in the year 2000 and we
have only seen five years of action on that front. And
it's really over the last five years that, India has come
to dominate the global BPO stage and proven that the McKinsey
report of 1999-2000 was not hype, but actually turned out
to be true." He further adds, "In fact, McKinsey
had to revise its projections upwards for the industry in
2002-03 itself, which demonstrated once again that the industry
has surpassed all expectations. For example, when we
started our company in February 2000, little did we realize
that it would be such a huge industry that would grow at such
amazing speed over the next several years."
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