The BPO Market Outlook

Business Process Outsourcing (BPO) is the fastest growing segment of IT outsourcing, as organizations see the opportunity it offers to outsource business processes with the following benefits: the ability to focus on core competencies; cost savings; improved business process quality; flexibility in terms of technology; and reduced time to market.

The aspects of a horizontal BPO may include CRM, human resources,finance and accounting, and procurement. Increasingly competitive environment and pressure to improve operational efficiency in recent years has forced companies to focus on areas that deliver competitive differentiation. As a result, companies are looking for opportunities to pass on responsibility for supporting or administrative functions that are not considered strategic to the business.

Some key findings of this market have been:

• The market for F&A BPO is set to grow from $13.9 billion in 2005, to
  over $18.5 billion in 2008, at a CAGR of 10%.
• BPO can lead to savings of up to 30%, which can increase to 50% if
  the outsourced work is offshored.
• The BPO market is the single fastest growing area of the IT services
  sector. Growing 8% annually, spending on BPO services is expected
  to grow from $112.1 billion in 2005 to $144 billion in 2008, an
  increase of 40%.

The Indian BPO market is estimated to have grown from $4.6bn in 2004 to $6.3bn in 2005, recording a growth of nearly 48 per cent – accounting for 27 percent of total software and services exports. Net employment in the Indian BPO segment is estimated to have grown by approximately 100,000 in 2005, taking the total direct employment to 316,000. The BPO sector is predicted to grow to more than $6bn in 2006. "Source 2006 Study Published by Business Insights"

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Top 10 fastest growing IT services providers, 2005
table (1a)

		Revenue ($m)	Growth (%)
1	Atos Origin	6,851	75%
2	Cognizant Technology Solutions	587	59%
3	Infosys Technologies	1,592	49.8%
4	Satyam Computer Services	794	40.3%
5	CGI Group	2,640	40%
6	Wipro Technologies	1,388	39.6%
7	Tata Consultancy	1,388	39.6%
8	SRA International	616	36.9%
9	CACI	1,146	35.9%
10	WM-Data MB	1,121	24.9%

Relevance

Why is this so important to large companies? 

• Lower costs. Because BPO providers focus purely on the processes that they provide, they are able to offer a lower cost to organizations than they might otherwise be able to get themselves. For many of the processes outsourced such as contact centers, the startup costs are significant, and or many are hard to justify given the alternative of a BPO service. Similarly, the BPO provider will often guarantee that it is using the most appropriate and up-to-date technology, allowing the user to avoid issues such as sourcing and upgrading.
• Improve service. Because outsourcing contracts are constructed using SLAs (Service Level Agreements), a predefined level of service is guaranteed. In most situations, this level is higher than the company itself could provide internally. For applications such as customer interaction, this is critical as poor communication with customers can affect revenues.
• Gain access to expert skills. As companies are faced with increasing regulation, the demand for appropriately skilled staff is growing. Often, it is difficult to ensure an adequate level of knowledge within internal staff to guarantee performance. Using a BPO provider for select processes, however, provides companies with staff that are experts in specific areas. This extra knowledge can help to relieve the pressure of issues such as regulation. Similarly, external experts can help optimize and streamline internal processes through the application of best practices methodology.

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Qualifications

There is no particular qualification required as such to work in a BPO. Some of the preferred professional categories and the qualifications associated with them as per the industry’s recruitment trends for entering the KPO sector are:

MBAs (HR, IT, Finance, Marketing, IB, etc )

Doctors ( MBBS)

Engineers (B. E., B. Tech, M. Tech)

Lawyers (LLB)

Teachers (B. Ed)

Chartered Accountants

Economists

Architects

Journalists

People with science background have a better chance as they have a flair for mathematics, science and research. People with good educational background, analytical abilities, command over English and IT acumen can look forward to a bright career in BPOs. So basically, the key competencies required are:

Domain knowledge

Basic interest in the field of work

Aptitude for working with data and information

Good communication skills

Team work

 

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