News Release

E-commerce boom offers a lifeline for listless BPO units

September 15, 2014

MUMBAI/NEW DELHI: The country's business process outsourcing industry looks set to get its buzz back, as a pickup in the country's e-commerce industry and increased focus on citizen services by the government creates new avenues for BPO players. Until now, the domestic BPO industry was dependent on telecom clients and bore the brunt of the slowdown as the telecom operators pushed BPO companies for increased cost savings.

The pressure saw BPO firms such as FirstSource Solutions and Hinduja Global Services stepping back from the market. But now, industry watchers expect the going to get better.

"We see the domestic market growing between 16% and 20%. New sectors are opening up such as travel and hospitality, e-commerce," Karthik Ananth, director at consultancy firm Zinnov, told ET.

"Domestic companies are also looking at new business models, including upselling products to create a better value to the customer and a better deal for themselves." According to Ananth, e-commerce firms are particularly looking at outsourcing non-core but essential parts of their business process services. For instance, Flipkart has signed a deal with the Essar Group's BPO arm, Aegis, which was reported by ET last month.

Other firms have seen similar success.

"We have associated in the last month with one of the largest e-commerce players in India today. There is huge opportunity to get into strategic outsourcing, and why I keep using the word strategic is because it's no longer about place an order or contact centres and back offices. It's about social media interaction and e-mail interaction," said Aditya Arora, managing director for Serco India.

The Modi-led government's increased focus on citizen services is also expected to provide a fillip to the sector.

"You can't have citizen services without technology enablement and process efficiency. We expect this to become a big chunk of the industry in the next two-three years. We are already facilitating discussion between the BPO industry and the state IT secretaries," said KS Viswanathan, vice-president of industry initiatives at Nasscom. Nasscom estimates that the domestic market will grow to about $22.5 billion in this financial year.

Companies focused on the domestic sector are factoring in this growth and are making investments. Delhi-based Navigant, a small angel-funded BPO company, is looking to add 1,000 seats in the coming financial year to capitalise on the market. Tata Business Support Services, the customer service arm of the Tata Group, is looking to grow its topline to Rs 2,500 crore by 2018-end. The company reported revenue of rs 370 crore in 2012-13. The domestic sector is benefitting from a drive by Indian companies to provide higher value services for highticket customers.

"We are seeing more customers being willing to pay to offer better services to their most valuable clients. It is most prevalent in the telecom sector, where the companies are asking for people at international-service levels for higher paying clients. But such customer segmentation is beginning to happen in other sectors as well," Sandip Sen, CEO at Aegis, had told ET recently.

Navigant CEO Ankur Bhatia said his company was seeing demand for more complex services and premium customer support from realty developers like Unitech.

Source: E-commerce boom offers a lifeline for listless BPO units