The Hindu Business Line : `Indian BPOs must focus on higher-value services'

Although the offshore Indian BPO firms are expanding their geographic presence rapidly, they still lag the multinationals in their reach and are not yet a perfect match for very large customers.

New Delhi , April 3

Offshore Indian BPO players must expand their geographic presence not only to match the footprint of large enterprise customers but also to leverage emerging low-cost locations themselves, as part of the transition roadmap to join major multinationals as leaders in the BPO market of the future, says a latest Forrester report.

"A host of alternate geographies are emerging — including Romania, Panama, and Vietnam in addition to the oft-cited example of China. But sizeable, reputable providers based in these geographies remain few. The threat posed by these geographies, rather, is that other global outsourcers will harness these geographies more rapidly and effectively," the Forrester Research study titled `Offshore Indian BPO leaders emerge' said.

Many customers require services delivered at least in part from their domestic geography — something many offshore Indian BPO players still do not offer. Although the offshore Indian BPO firms are expanding their geographic presence rapidly, they still lag the multinationals in their reach and therefore are not yet a perfect match for very large customers.

"But these offshore firms are emerging as a good fit for the next highest rung of the large enterprise segment and the larger end of the mid-market," Forrester said.

Impressive growth

Taking stock of the BPO market, the study noted that the Indian offshore industry continued its impressive growth despite a change in its principal emphasis from voice-based, contact centre solutions, to transaction-based and knowledge-based services. "Although Indian offshore BPO players compete with a variety of multinational suppliers that in some cases have had Indian operations for over a decade, their value proposition is still viewed as distinct by service buyers," the study said.

Cautioning that offshore model using only labour arbitrage value proposition would cease to be viable in the next 18-24 months, Forrester said that India's players were therefore redefining themselves to pursue broader global reach, higher-value services, and platform-based solutions. "Only some of them will succeed in this transition, joining the major multinationals as leaders in the BPO market of the future," it added.

Broader reach

The report said that offshore BPO players must ultimately become known more for their process and technology expertise than for their labour arbitrage.

"In doing so, they will outgrow the very thing that made them attractive in the first place. But increasing buyer sophistication means providers must learn to say no to low-value transactional services such as data entry and commodity voice services — a temptation few existing players can yet resist — unless higher value services are attached," Forrester pointed out.

The report suggested a focused approach on fewer albeit deeper value propositions.