Why BPO is the Fastest Growing Industry in India

A BPO service provider typically handles and manages another company’s unique business operation. Business process outsourcing (BPO) is the fastest-growing segment in the ITS (ITES) industry in India. Different industries have initiated outsourcing, such as IT, engineering, business, etc. According to the NASSCOM, the key reasons behind the success of India in the ITES/BPO industry are abundantly skilled and English — the unique localization of India and an investor-friendly tax structure have also made the BPO industry in India more successful. India has become the world’s leading competition for an attractive salary margin with numerous outsourcing firms.

India as a major leader for global outsourcing

More than 82 percent of US companies classify India as their first choice for outsourcing apps. Many multinational corporations outsource their corporate processes to Indian BPO firms. India’s share of the global software and back-office outsourcing industry is 46%. Low education costs for professionals in India allow them to continuously upgrade emerging technologies, which are a critical factor for success.

For the following factors, India is the world’s favorite outsourcing destination:

  • Networks for telecommunications.
  • Innovation, imagination and smart solutions
  • Professional and highly trained workers
  • Consistency cost-effectiveness
  • The market climate of India
  • India is the largest pool of IT brains introduced early to the industry, including 120,000 qualified IT professionals
  • About 2.1 million graduates leave Indian universities annually.
  • The largest population of India speaks English
  • Cultural compatibility and friendly interactions with customers

The BPO industry has risen nearly nine times over the past decade, from 1.6 billion dollars to 14.7 million dollars. The estimated annual growth rate for this period is 25 per cent. The BPO sector currently employs 1 million workers and also has indirect jobs of 3.5 million.

Indian BPO sector growth
Source: Technavio

Major factors that made the BPO industry a big hit were:

1. Tackling tough times

The BPO sector was also impacted by the subprime crisis and the consequent crash. By increasing the depth of their offerings, BPO suppliers reacted quickly to the scenario. The emphasis was on flexible operations and their performance was increased. Innovative price models in line with global demand were planned. The industry also preferred to concentrate on new recession-proof verticals and consumers. BPO affiliates registered decent output as part of Wipro and Infosys. This helped in the growth of overall sales too as per NASSCOM.

2. No more basic offerings

The sector is now in a fast growth period and has moved from its earliest days. It now offers a range of maturity levels from simple voice-based offers. Several new fields have been added, such as recruitment, outsourcing and information services. Knowledge Process Outsourcing is expected to promote the growth of the overall industry in the coming years, providing services such as research and analysis, outsourced legal processes, financial research and data processing.

We expect India to remain a leader, particularly in the KPO space. These expert services are difficult to replicate in other countries such as Sri Lanka, Pakistan, Bangladesh and the Philippines. This is because of its vast professional base, its superior expertise and its English skills. According to the global research firm Gartner, India’s KPO market is projected to grow by 25-30% annually.

3. Surprising elements driving growth:

The involvement of rural BPOs: Tier 2 cities are now the focal point of the IT industry and the production of apps. BPO is present in more than 50 cities and cities only in major metro companies. The modern phenomenon of rural BPOs was pioneered by Karnataka. In India, a small, non-described village, the first rural BPO was established some 150 kilometers from Bangalore IT Hub. BPOs illustrate how information technology can transform the rural economy. Jobs, money, and training are now available locally, dramatically improving the outlook of the village youth. This also prevents them from migrating into towns and increasing the burden on city services, which are already scarce. According to NASSCOM, approximately 60 percent of BPO workers in the cities are present in small towns and villages.

The involvement of rural BPOs: Tier 2 cities are now the focal point of the IT industry and the production of apps. BPO is present in more than 50 cities and cities only in major metro companies. The modern phenomenon of rural BPOs was pioneered by Karnataka. In India, a small, non-described village, the first rural BPO was established some 150 kilometers from Bangalore IT Hub. BPOs illustrate how information technology can transform the rural economy. Jobs, money, and training are now available locally, dramatically improving the outlook of the village youth. This also prevents them from migrating into towns and increasing the burden on city services, which are already scarce. According to NASSCOM, approximately 60 percent of BPO workers in the cities are present in small towns and villages.

More Facts on the BPO industry in India:

  • BPO sector of India accounts for 56 percent of the global outsourcing of business processes.
  • There has been a rise in demand for Indian BPO services by 50% per year.
  • 70% of the revenue from contacts in India in the BPO industry is 20% from data entry jobs, the remaining 10% from work relating to information technology.
  • It is reported that the BPO sector in India has increased medium income by 54 percent.
  • More than 74,400 Indians have been hired by the Indian BPO industry.
  • More than 1.1 million Indians will be employed in the Indian BPO sector.

Conclusion

It is true that initially, companies were looking at their benefits when they once came to India, but over the years India has enjoyed its benefits too, especially the younger generation. This is a mutual giving and receiving mechanism that will last for years and contribute to the economic success of both parties.

References:
https://www.scalefast.com/blog/the-big-benefits-of-outsourcing-your-ecommerce/
https://www.mattsenkumar.com/ecommerce-outsourcing-functions-that-can-benefit/
https://www.magellan-solutions.com/blog/ecommerce-outsourcing/
https://www.ibef.org/industry/ecommerce.aspx

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