Rising Re makes BPOs turn to domestic mkt

Written by Vrishti Beniwal | New Delhi, Nov 23 | Updated: Nov 24 2007, 05:13am hrs
The unprecedented boom in telecom, banking, financial services and insurance verticals and the rising rupee are tempting BPOs to look at the domestic market with a renewed focus. The domestic BPO market, estimated at around Rs 6,130 crore in 2006, is growing at 56% to touch Rs 36,781 crore by 2010.

As an increased number of Indian companies are trying to focus on their core business by outsourcing specialised functions to third parties with domain experience, Spanco, IBM Daksh, Mphasis, HTMT, Intelnet, EXL Service, RMS and Firstsource as well as some banks through their subsidiaries are eyeing a pie of the domestic market.

US-based vCustomer is planning to increase its revenue from India from 5% to 30% by next year. We don't service clients in BFSI and government in the US, but are heavily banking upon these sectors in the Indian market. We have already signed four clients in auto, logistics, retail and government services, said Sanjay Kumar, CEO, vCustomer. According to experts, this is the beginning and companies will like to outsource many more things from customer service to recovery process to ensure better management and cost reduction. Companies in manufacturing (especially automobile), government and utilities are also expected to drive the next phase of growth. Outsourcing will be the sole differentiator in sectors like telecom, where till recently the focus was on acquisition, but now it will shift to retention Domestic contracts, which are typically long-term, sustain growth as they are able to provide better support and value to their end customers, said Madan Mohan, director, Frost & Sullivan.

Despite relatively low margins in the domestic market, BPOs are gung-ho that they dont have to make any additional investment in infrastructure. We are looking at the domestic market as part of our Asia-Pacific plans, and expect to ink deal with few clients in telecom and e-commerce domains by next year, said Anil Kumar, CEO, RMS. After Ahmedabad, Bangalore, Noida and Puducherry, MphasiS on Friday inaugurated a new BPO facility in Indore to provide contact centre services to Idea Cellular. This is the fifth MphasiS BPO facility that caters exclusively to the domestic BPO space, the other four being Ahmedabad, Bangalore, Noida and Puducherry.

Pradeep Udhas, executive director, KPMG, said, when BPOs were set up in India the domestic market was not large enough, so everybody went out.