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BPOs queue up to book seat in billion dollar club

Started by ravindar, Jul 12, 2008, 12:15 AM

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ravindar

BPOs queue up to book seat in billion dollar club

The game is fast changing for the Indian business process outsourcing (BPO) industry as for several players, entry into the billion-dollar club may be round the corner.

Given the inorganic opportunities, maturity of outsourcing and an appetite to grow scale rapidly, many BPO players may breach the psychological barrier much faster than IT services companies.

Large players manage to create a big impact on clients and employees and are serious contenders for mega deals, says Tholons CEO Avinash Vashistha.

As of now, leading the race to get into the billion-dollar league is Genpact, which reported a revenue of $823 million for 2007 with an year-on-year (YoY) growth of 34%. Others in the fray are WNS and Aditya Birla Minacs, who are distinctly behind Genpact but have ambitious plans.

WNS, with a revenue of $460 million, has been scouting for inorganic options to fuel growth. Aditya Birla is already looking at a $1-billion revenue in the next three years from its current level of $392 million.

Analysts feel that IT services success story is now unfolding in the BPO industry. Once a couple of Indian IT services companies such as TCS, Infosys, Wipro got into the billion dollar league, they were catapulted into the big stage. It is very commonplace now for the India IT services biggies competing directly against the global giants like IBM, Accenture, HP, in fact, even winning a few deals.

Large Indian IT services players, which roughly took about two decades to cross the $1-billion mark, operated in a different era when they mostly grew organically. Their inorganic growth path came much later unlike the case of the BPO companies, which may have crunched the time to grow big.

Says Ernst & Young partner (business advisory services) Milan Sheth, "The BPO journey in India has been from the early part of this decade coinciding with globalisation." But all is not rosy for the BPO industry, whose fortunes are linked to an environment where there is serious competition coming from 15 other destinations.

On the other hand, India as a destination enjoyed a virtual dominance in offshoring, Sheth says. Aditya Birla Minacs MD Dev Bhattacharya says achieving this target would give them the status of a world class company and also be a big influence in bagging large deals.

According to a Nasscom-Everest study, the Indian BPO industry was staring at a total export market opportunity of $220-280 billion by 2012 while the domestic segment would provide an additional $15-20 billion.

The study further says that in just over a decade, the industry has grown to reach nearly $11 billion in export revenue employing over 7 lakh. And the next five years could potentially see a five-fold growth.

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