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India remains premier back office sourcing destination: Nasscom

Wed, Sep 17, 2014, 07:03 PM
Bangalore, Sep 17 : As in software services, India remains a premier sourcing destination for back office services worldwide, with a potential to be a $50 billion industry by 2020 from $23 billion in 2014, a top industry representative said Wednesday.

"The Indian business process management (BPM) industry, which provides back office services worldwide, has witnessed exponential growth since 2010 with strong fundamentals to remain a premier sourcing destination for global firms across verticals," National Association of Software and Services Companies (Nasscom) president R. Chandrashekhar told reporters here.

A recent Nasscom survey found that the BPM players have come of age from providing voice and data services to end-to-end services, including analytics for meeting their clients' expectations, which are changing to business outcomes through customer acquisition, revenue addition and improving workforce performance.

"The BPM industry has potential to double its revenue growth to $42-50 billion and employ two million people by 2020, thanks to dynamic shifts in demand side markets spanning verticals, geographies, customers and services," the former telecom regulatory chairman said on the margins of its strategy summit on back office business.

Noting that dynamic shifts in demand side will compel the BPM players to adopt alternate growth and delivery strategies, the trade body head said that emerging technologies would eliminate some current offerings but pave way for new opportunities.

"The BPM firms have to foster innovation and collaboration, identify unmet and unknown customer needs and redesign their service offerings to address the emerging opportunities," Chandrashekhar asserted.

According to the survey findings, the global BPM spend increased to $168 billion in 2013 from $142 billion in 2010, growing at a CAGR (cumulative average growth rate) of six percent, while its offshoring market size grew 9-10 percent CAGR to $53-55 billion from $40-42 billion in the same period (2010-20103).

"India's share of the global offshoring market has increased to 38 percent in 2013 from 32 percent in 2010, while that of rest of the world declined proportionately to 62 percent from 68 percent in the respective three years.

In terms of spending by service lines, human resources accounted for 42 percent in 2013 as against 44 percent in 2010, customer care 37 percent (36 percent), finance and accounting 19 percent (18 percent) and procurement two percent (same).

Maintaining a steady growth during the past four fiscals, the Indian BPM industry revenue increased to $23.2 billion in 2013-14 (exports contributing $19.9 billion and domestic market $3.2 billion) from $14.7 billion in 2009-10 (exports were $12.4 billion and domestic market contributed $2.3 billion).

"The Indian BPM industry has presence in 78 countries the world over and offers back office services in 38 languages to about 500 global firms. Customer interaction services (voice-based) account for 41 percent of the back office operations, financial services 23 percent and knowledge services 19 percent," Chandrashekhar said, citing the survey findings.

Hiring by the industry players shot up 24 percent CAGR to 956,000 employees in 2013-14 from 770,000 in 2009-10.

"Over the last year, with global corporations requiring differentiated and focused solutions, the BPM players have shifted their approach by becoming transformational partners than being execution partners, with their services tailor-made for customer needs to provide value proposition to their business," he noted.

Observing that business outcomes were becoming a priority for global customers, Nasscom BPM council chairman Keshav Murugesh said the industry was creating a strategic partnership with its customers to deliver on the outcomes.

"Highlight of the industry is the growing demand for knowledge services followed by marketing, data analytics and legal services. Major back office firms also focused on transforming business processes by using new technology and created newer business models and services," he added.
Agency: IANS

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