Time’s ripe for niche outsource expertise
August 9, 2009
The generalist has overgrown its use. This is the time for the outsource specialist.
Bharti Airtel, India’s biggest mobile services provider, was one of the first to sign an USD272.2 million deal with four global BPO companies — IBM Daksh, MphasiS, TeleTech and HTMT in August 2005. In fact, the trend started much earlier, when Airtel outsourced its IT and cellular networking to IBM and Ericsson.
Later, the country’s biggest public sector bank by capital assets, the State Bank of India (SBI) inked an USD56.8 million deal with MphasiS BPO for providing voice-based services to its customers. Then again, Dabur, one of the biggest FMCG behemoths in India, signed a 10-year agreement with Accenture, outsourcing its IT and supply chain management to Accenture.
Two things are happening here:
1. Indian companies are outsourcing to global service providers on their own turf, and second
2. The nature of services sought has also changed from simple voice-based contact services to complex data management, market research, accounting, administrative and logistics support, especially in new and emerging sectors such as retail, fashion apparel, and automobile components.
Even the outsourcers span a whole spectrum — banking, insurance, telecommunications and government verticals, besides of course, the traditional FMCG companies in need of complex CRM interventions for managing their loyal customer base, at a time when retention is more cost-effective than new customer acquisition.
To be sure, the BPO adoption pattern still differs across these sectors. For instance, while there is rapid adoption in the telecom sector, the BFSI industry’s BPO adoption has slowed down a bit with the market slow down. Or, is it because there is shortage of sector-specific expertise? Experts contend that it could be the latter. Although outsourcing is more process-specific than sector specific, this is the time when service providers can demand a premium for domain expertise. The public sector is specifically looking for service offerings that would take it to the next level and what better way of doing it than through an e-governance model?
“Country and sector specific opportunities have begun to drive market growth,” says one expert. And, this is true for other traditional sectors too, such as supply chain management, retail etc. Analytiqa’s latest research, “Western European Logistics 2007” for instance reveals that spending on logistics services across the Automotive, Consumer, Pharmaceutical, Retail and Technology industries is set to increase by EUR 30 billion over the next five years as the size of outsourced logistics market grows by 33%.
Meanwhile, the demand for complex services has also intensified. Therefore, while earlier, the BPO market was largely voice-led and customer care, sales and marketing accounted for over 70% of all outsourced deals, today, data services have gradually begun to overtake voice services. Very soon, it would be difficult to separate voice services from data services because the two would be so well integrated.
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