No vertical limits: BPOs widen sectoral reach
Large BPO firms are widening their vertical or sectoral expertise to cater to the changing demands of the outsourcing industry.
By Pranav Nambiar, TNN |
BANGALORE: Large BPO firms are widening their vertical or sectoral expertise to cater to the changing demands of the outsourcing industry.
Historically BPOs have been horizontal focused. They offered services like customer interaction and support , finance and accounting, and human resources that are applied across different industry verticals. Industry body Nasscom estimates that horizontal services account for more than 70% of the Indian BPO industry.
But with clients now more open to outsourcing sector specific mid- to front-end functions that require deeper domain knowledge, BPOs are enhancing their expertise in such functions. These include areas like mortgage processing, core banking, supply chain and healthcare insurance. For clients, this helps to contain costs and focus on their core business.
Deepak Patel, group CEO of Aditya Birla Minacs, said that insurance clients are now outsourcing core processes in underwriting and banking clients want BPOs to analyze risks associated with loans and make decisions on loan disbursements.
Aditya Birla Minacs focuses on banking, financial services and insurance (BFSI), manufacturing, and telecom, media and entertainment verticals.
The BPO vertical focus is similar to what IT companies are doing. T J Singh, research director at Gartner, however said that unlike IT companies, Indian BPOs have not appointed vertical heads or made major managerial changes. BPOs add vertical expertise by either making acquisitions or setting up bases in countries where a particular expertise exists. On May 2, BPO firm EXL Service Holdings acquired finance and accounting outsourcing service provider Outsource Partners International, deepening EXL’s expertise in this space.
Others like Tech Mahindra , TCS and Aegis are also scouting for acquisitions in different geographies. Some Eastern European countries are excellent for accounting, while the US is good for healthcare experts.
BPOs are also appointing domain specialists to improve their verticalized offerings . For instance, banking sector executives are hired to work on actuarial (risk assessment ) roles at BPOs.
“When clients interact with us, they interact with people with specialized knowledge and work skills from the same industry,” said Keshav Murugesh, group CEO of WNS Global Services.
WNS has introduced a completely new strategic orientation, by verticalization of the company around six areas including travel, banking and finance, manufacturing and retail. “Our core area of investment now lies in sales and new verticals ,” Murugesh said.
Sameer Dhanranjani, country head of Fidelity National Financial, said that competition from other low-cost geographies is making it necessary for Indian BPOs to offer higher end differentiated services. “Also, verticalization enables BPOs to win longer term sticky deals with better margins,” he added.
Gartner’s Singh however said that Indian BPOs needed to do much more to compete against MNC BPOs like IBM that have very specialized offerings. “Pure play BPOs have the offerings, but they struggle to market them; and IT companies with BPO arms are unsure about the extent of investment to be made in verticalized solutions,” he said.
Expertise Holds The Key
t BPOs have been horizontal focused with services like finance, HR, etc t Now they are building expertise in BFSI, telecom and manufacturing t Some of these solutions are in areas like mortgage processing, core banking, supply chain, healthcare insurance, etc t Clients are looking at domain experts to outsource high-end processes to save on costs and focus on main business t BPOs build domain expertise through acquisitions or hiring of domain experts t It helps BPOs win larger sized deals t IT cos have also adopted verticalization
Historically BPOs have been horizontal focused. They offered services like customer interaction and support , finance and accounting, and human resources that are applied across different industry verticals. Industry body Nasscom estimates that horizontal services account for more than 70% of the Indian BPO industry.
But with clients now more open to outsourcing sector specific mid- to front-end functions that require deeper domain knowledge, BPOs are enhancing their expertise in such functions. These include areas like mortgage processing, core banking, supply chain and healthcare insurance. For clients, this helps to contain costs and focus on their core business.
Deepak Patel, group CEO of Aditya Birla Minacs, said that insurance clients are now outsourcing core processes in underwriting and banking clients want BPOs to analyze risks associated with loans and make decisions on loan disbursements.
Aditya Birla Minacs focuses on banking, financial services and insurance (BFSI), manufacturing, and telecom, media and entertainment verticals.
The BPO vertical focus is similar to what IT companies are doing. T J Singh, research director at Gartner, however said that unlike IT companies, Indian BPOs have not appointed vertical heads or made major managerial changes. BPOs add vertical expertise by either making acquisitions or setting up bases in countries where a particular expertise exists. On May 2, BPO firm EXL Service Holdings acquired finance and accounting outsourcing service provider Outsource Partners International, deepening EXL’s expertise in this space.
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Others like Tech Mahindra , TCS and Aegis are also scouting for acquisitions in different geographies. Some Eastern European countries are excellent for accounting, while the US is good for healthcare experts.
BPOs are also appointing domain specialists to improve their verticalized offerings . For instance, banking sector executives are hired to work on actuarial (risk assessment ) roles at BPOs.
“When clients interact with us, they interact with people with specialized knowledge and work skills from the same industry,” said Keshav Murugesh, group CEO of WNS Global Services.
WNS has introduced a completely new strategic orientation, by verticalization of the company around six areas including travel, banking and finance, manufacturing and retail. “Our core area of investment now lies in sales and new verticals ,” Murugesh said.
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Sameer Dhanranjani, country head of Fidelity National Financial, said that competition from other low-cost geographies is making it necessary for Indian BPOs to offer higher end differentiated services. “Also, verticalization enables BPOs to win longer term sticky deals with better margins,” he added.
Gartner’s Singh however said that Indian BPOs needed to do much more to compete against MNC BPOs like IBM that have very specialized offerings. “Pure play BPOs have the offerings, but they struggle to market them; and IT companies with BPO arms are unsure about the extent of investment to be made in verticalized solutions,” he said.
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Expertise Holds The Key
t BPOs have been horizontal focused with services like finance, HR, etc t Now they are building expertise in BFSI, telecom and manufacturing t Some of these solutions are in areas like mortgage processing, core banking, supply chain, healthcare insurance, etc t Clients are looking at domain experts to outsource high-end processes to save on costs and focus on main business t BPOs build domain expertise through acquisitions or hiring of domain experts t It helps BPOs win larger sized deals t IT cos have also adopted verticalization
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