The Economic Times - Sep 16, 2008

The domestic BPO industry in India is at an inflection point with Indian buyers growing in scale and vendors with greater capabilities emerging. Radhika Balasubramanian, head, Intelenet India Domestic BPO Operations, talks to Vanisha Joseph on the growth prospects for India’s domestic BPO.

Excerpts.

How do you view the domestic BPO market in India?

The domestic industry started gaining momentum when Indian companies realised the advantages of outsourcing their non-core business operations to specialised players to drive efficiency in their operations and overcome challenges associated with managing processes and human resources. This enabled them to focus on customer acquisition, marketing and R&D. According to a report by the Everest Group and Nasscom, India’s $11-billion BPO industry will reach $30 billion by 2012. The domestic BPO industry in 2005 was fragmented with small players providing mainly outbound telemarketing services.

What are the factors driving domestic demand?

The sectoral growth is being driven by an increase in scale and depth of existing service lines, addition of newer vertical-specific and emerging niche business services, continued expansion of service portfolios and higher value processes. As the Indian economy becomes more globally integrated, businesses in India will face more global competition and will be pushed to deliver world-class levels of product and service quality. BPO has emerged as an effective means of entrusting specialists with the task of consistently delivering the desired high-levels of quality — leaving client organisations to focus on core businesses.

Why is Indian BPO business attracting big investment?

Private equity activity in India had been on the rise due to the strong economic performance, booming capital markets and a robust corporate scorecard till early February 2008. 2006 was a turning point for India when PE investments into the country hit a record $5.4 billion.

Though PE investors have been active in sectors like IT, telecom, infrastructure, banking, their new ‘poster child’ is the fast-growing Indian BPO sector. Last year, Intelenet received PE backing from leading PE player Blackstone, which helped us achieve our growth plans of being a global BPO player with a global footprint.

What are the challenges to sustain profitable growth in the long term?

Key challenges still continue to be the fragmented nature of the industry, customer mindset and margins. Domestic BPO requires a faster ‘time-tomarket’ compared to international BPO operations hence players need to be more flexible and adaptable. Being an early mover in the segment helps Intelenet achieve a headstart in working with various companies and industry verticals. On the technology front too, we benefited from developing proprietary CRM and technology systems, which can be customised to individual client’s needs. With a large client base of over 40 clients, Intelenet is the largest player in the domestic BPO sector with a national presence. Intelenet’s domestic business provides state-of-the-art solutions to vertical industries to meet their voice and BPO needs.

Which verticals will drive growth for the domestic BPO players?

The chief verticals in the outsourcing industry are banking and financial services, insurance, retail, technology, telecom, travel and hospitality. As the industry grows in size and scale, many firms are beginning to adopt a verticalbased approach to cater to emerging market trends. Newer processes and areas like KPO, LPO, EPO have evolved over the period of time. The processes have also become more complex with areas like engineering design, prototype development being outsourced.

Five years from now, how do you see the domestic BPO sector in India?

We plan to ride this wave of the domestic BPO boom and consolidate our position further by focusing on areas that are traditionally considered weak in the domestic BPO sector such as cost savings through process improvements, technology and systems.