The Indian BPO industry achieved a significant milestone in 2011 – it earned more than USD 15 billion in revenue and now directly employs more than a million young people. It is also an established fact that the potential is 10X more and many of the leading Fortune 500 companies have only begun their offshoring journey.
Over the last 2–3 years, many providers have revamped their capabilities to deepen client relationships, refocused delivery organisation around key verticals (for example, banking, telecom), built new delivery models, and increased the width and depth of their services. Now the industry leaders are signalling a move towards delivering tangible business impact as opposed to relying only on improving cost quality equation.
While the performance and potential continue to impress, not everything is as rosy as it sounds. On the demand side, the outlook for 2012 is uncertain. External factors like pricing pressure, delays in decision making, political pressure due to the impending US presidential election, and decline in volumes will continue to bother the industry. On the supply side, our analysis of more than 250 accounts suggests that more than half these accounts deliver lower than industry growth rates and margins. Only a handful (less than 10 per cent) of accounts are able to deliver profitable growth, that is, more than 15 per cent CAGR growth rates and greater than 20 per cent EBITDA.
However, this is not the first time that the industry is dealing with a downturn. The industry did a remarkable job of coming out of a low demand phase in 2008–09. There are substantial learnings from the ‘star accounts’ that have successfully delivered above industry benchmark level growth rates and profitability, even during the 2008–09 recession. These accounts have aligned strongly on objectives with the senior client leadership teams, delivered 10–15 per cent productivity year-on-year, disproportionately focused on impacting revenue for their clients and systematically reduced delivery costs per employee.
Additionally, industry leaders have been talking about non-linear growth, transformational outsourcing, driving synergies between IT and BPO organisations and moving up the value chain in terms of skill sets. So the grim outlook for 2012–13 may hold a blessing in disguise and catalyse industry movement to focus more on business outcomes and innovation.
As we move deeper in 2012 and beyond, it is critical to step-back and define how the industry can reorient itself to protect its margins in the near term and reinvent to link its growth to business outcomes and real value addition. Keeping this governing thought in mind, E18, the events arm of Network 18, is organising a one-day forum titled, “BPO INDIA FORUM 2012” on 9th and 11th May 2012. At the conference we hope to discuss the opportunities and challenges that the industry will face and need to overcome in some of the fruitful sessions with the industry and thought leaders.
Key Topics of Discussion
* For CEOs: Driving non-linear growth - do we have a business model?
* For COOs: and heads of business units: Success mantras for 2012 - growing your key accounts profitably
* For HR leaders: Lessons from leading providers - managing and integrating a global workforce
* For CIOs: Redefining the technology agenda - from enabling to changing the game for the industry.
* For CIOs: Leveraging technology to improve profitability and win clients in new geographies and segments
