Realigning for Growth

India BPO Market Landscape (2010 to 2014)

1
2009
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 Innovation will drive up-to 1/3rd of growth opportunity
Indian BPO Market Size Leading Innovation Drivers for BPO Industry
35
(2010-2014)
Innovation Analysis Importance
Best
Through
30 Innovation
Size Advantage

Base Can leverage

25 Size Moving up
existing
the value
relationships &
US $ Bn

chain capabilities
20

Current Ease of scalability

15 Size
Issues
Geographical
10 expansion Significant upfront
(Customer) investment involved
5 +
Vertical Building up
Expansion language, industry
0 expertise takes time
4 Years
2010 2014

Lower Higher
Importance Importance

BPOs should take aggressive initiatives to move up the value chain & engage new
business models with trusted clients.
Source: RedSeer consulting Research

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 Voids are available in current service offerings
Current scenario in horizontals1 Growth by horizontals

Procurement

Knowledge Services

Human
Finance &
Resource
Accounting
Management

Customer Support
and Interaction

High Moderate Low Market

growth growth growth Size
1 values index to 100: Full range of services

The major growth will be driven by Procurement services. Customer Support

despite being the largest horizontal will still see moderate growth.

Source: RedSeer consulting Research

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 which could be filled by moving from transactional to
strategic service offerings
BPO Value spectrum Opportunities
Transactional Business Value Strategy making Growth Potential = 50%; whereas
transaction services growing by 24%
Inbound Outbound
Vendor CAGR
Customer

Customer Customer
Support

Service Service
Management Process expertise needed in higher
business value services
Customer Demand Customer
Increasing trust to outsource
complaints Management Analytics
Expensive, Business sensitive work like
Legal, Audit, Consulting etc in USA &
Finance and
Accounting

Management Business UK.

Tax
Reporting Intelligence

Accounts Intercompany
Receivables Accounting
Treasury Major Challenges

Compensatio HR Data Talent Movement from transactional to higher

Resource
Human

n Management Management business value services:

Complexity of execution
Benefits Recruitment Training Scalability of operations
Control take-away from clients
Standardized Semi-customized Unique

Source: RedSeer consulting Research

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 Focus shift from captives to BPOs is an indication of
client readiness
The current scenario Parameters Issues with Captives BPO advantage

Decrease in Captives Have developed expertise

(2000 2009) Seen as cost-saving in different functions & are
Value
F&I (Globally) : 61% to 17% agents for performing moving up the value chain
creation
Indian Captives: 39 to 14 transactional services from transactional to higher
Increase in Third-Party value services
Outsourcing
(2000 2009) The scope and quality of Greater flexibility for the
F&I (Globally) : 17% to 75% work is constrained by company in terms of
Flexibility
available resources and resources and scope of
In India, 60% of captives are capabilities. work
facing operational hurdles and
34% of captives are expected to Do not have cost
advantage in terms of BPOs enjoy economies of
scale down in the coming years Economies
scale. In India, it costs scale due to multi-client
of scale nearly 40% more than models.
outsourcing to BPOs

High to low
Impact

Value creation is moving up the ladder in terms of differentiating BPOs when

compared to Flexibility & economies of scale. BPOs are increasingly seen a strategic
partners rather than cost-saving agents
Source: RedSeer consulting Research

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 IT and Engineering Services industry is leading the pack in
outsourcing space
Outsourcing-Complexity(1) increases with Strategic Nature (2009 Data)
Associated Complexity

A B C
Minimal Outsourcing Tactical Outsourcing Strategic Outsourcing

Single product/service portfolio Limited portfolio Diversified portfolio

Minimal to no outsourcing policy Why
Single or limited function COG
outsourcing Multifunction, location vendor outsourcing
Low offshore ramp up policy Single vendor tie-up Case Studies In-tandem processes
Pure cost arbitrage related offshoring Tactical tie-ups Best
with in Class Model
vendor Need for transition planning
Non core functions offshoring the
Cost arbitrate as one Methodology
major driver External market and financial probing
No Impact on product innovation Appendix
Limited Impact on product/Innovation Future needs planning
Purely tactical offshoring, with single vendor Coordination between vendors and captives

Source: Interviews with Key stake holders (CXOs, and BU heads)

Note: Complexity has been defined as a factor of strategic nature of engagement, complex functions and increased number of vendors, processes or outsourced locations
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