New hubs, wary customers slow down BPO recovery

BANGALORE: The global economic recovery was expected to benefit the Indian offshoring industry that relies heavily on the Western markets. Though India’s IT sector has shown strong growth numbers, an integral subset of the offshoring industry—the BPO sector—seems to be something of a laggard.

Figures suggest that the industry will grow by 10-12 % to around $14.7 billion this fiscal as compared to the 30% plus levels the industry witnessed prior to the slowdown. Top tier IT companies are growing at an average of 20-25 % this year.

Most analysts believe that the industry will not rise to the pre-recession growth levels at least for the next couple of years. While announcing the July-September 2010 results, Pramod Bhasin, CEO of Genpact, revised the company’s growth forecast for the calendar year to 10-12 % from the earlier estimated 14-17 %. He said the environment had got more challenging for business process management as compared to the IT industry.

Another BPO major FirstSource grew by 3% year-on-year in July-September compared to 12.7% in the year-ago period and 53.8% year-on-year in the same quarter of 2008-09 . Srishti Anand, IT sector analyst at Angel Broking, said, “In early to mid-2000 s when large companies were testing waters in BPO, the incremental growth from a small base was huge. There are no similar observable growth drivers to restore past levels of growth.” India pioneered BPO industry two decades ago. Revenue ratio is around 43:57 between voice and non-voice services.