Over the last year, the business process outsourcing (BPO) vendors worked on optimising various administrative or marketing costs. The most obvious impact was on salary hikes and executive perks. Some of the companies resorted to cutting down the staff strength.
To meet these challenges, vendors have started aggressively innovating (in operations and marketing) to improve productivity and effectively reach out to their customers over the last few months. In 2010, it is expected that the management attention will be focused not only on process improvement but also on innovative approaches in marketing, said ValueNotes, a research institute tracking the IT industry.
The year 2010 and beyond will see new trends including emergence of Asia as major destination for outsourcing and increased IT spend, fading away of large captive BPOs, emergence of large KPOs, shift in BPOs attitude towards multi-service, multiple vertical and multiple markets, switching over from process innovation to marketing innovation among other things.
With the economic growth, a surging services sector, proliferation of technology in various sectors and increasing number of companies going through a global facelift, Asia is witnessing a rise in IT spend. With privatisation and increasing competition, companies in India and China are now undertaking massive computerisation and investments in technology to compete with global players. Increased buyer awareness and adoption of outsourcing across industry verticals will drive outsourcing.
According to the research, over the last couple of years, large captive centres pulled out of their BPO business. Among the factors influencing the sell off; the key factor now is valuation. Given the current scenario where everybody is looking for liquidity in the market, availability of quick cash is an attractive proposition. Most companies in the banking and financial sector, which have been under tremendous financial pressure have found the sell out an attractive option.
While not all captives will fade away, the larger captives are likely to sell off and/or shrink in size. One reason to retain a captive operationis to protect confidential information and processes.