Abstract

The revenues of the Indian Business Process Outsourcing industry from the domestic market (domestic BPO) were expected to touch US$ 6 billion by FY 2011-12. While outsourcing for other nations was primarily based on labor cost arbitrage, domestic outsourcing depended on productivity arbitrage. Indian companies outsourced some of their tasks mainly to improve efficiency and to focus on core issues such as improving product lines, brand building, and marketing. While the telecom and BFSI sectors had contributed a major share of revenues till 2009, companies needed to gear themselves up to succeed in new verticals such as the Government sector. Given the client demands for end-to-end-services, companies that had information technology outsourcing (ITO) as well as BPO offerings could differentiate themselves by providing a complete solution. Also, there was a significant scope for consolidation in the sector and for establishing (or partnering with) rural BPOs and BPOs in smaller cities and towns. The domestic BPO segment was characterized by captive outsourcing units occupying a major chunk of the market with a steady increase in market share of third party vendors. The domestic BPO market gave companies that were already involved in BPO exports the opportunity to hedge their risks and to utilize their infrastructure facilities efficiently. But the domestic BPO market had its own challenges — delays in government deals, the labor intensiveness of Indian companies, and the huge investments needed to address the skills gaps in the smaller cities where land and labor were relatively inexpensive as compared to the big cities.

Learning Objectives

The case is structured to achieve the following Learning Objectives:

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Keywords

Third party BPO, Contact center, Transaction processing, Non-voice based services, Technical support, Captive outsourcing unit, Industry verticals, Services sector, Telecom, Banking, Financial Services, and Insurance, BFSI, Government vertical, National e-Governance Plan, NeGP, Service lines, Export market, Labor cost arbitrage, Currency risk, Productivity arbitrage, Indian domestic market, Geographical diversification, IT outsourcing, ITO, Rural BPO, NASSCOM