Indian BPO Becomes BPM

Sudha Nagaraj Bharadwaj, Journalist | 1/25/2013 | 12 comments

Sudha Nagaraj Bharadwaj
The business process outsourcing (BPO) industry is looking for a PR boost with a quick name change. With competition from the Philippines, Latin America, and Australia, China cutting off some services, and political pressure in the US to bring back jobs, the pressure to do something was mounting. The $16.6 billion BPO industry is now BPM -- business process management.

The Indian National Association for Software and Services Companies (NASSCOM)is spearheading the change, a step welcomed by most C-suite professionals in the industry. The move obviously is to shift the focus from the "outsourcing" part to the value added proposition of managing business processes.

According to a November 2012 report by HfS Research, 67 percent of the 871 clients surveyed in the US wanted the 'O' to go. Phil Fersht, founder and CEO of HfS Research, told the Nasscom BPO Summit in Gurgaon, "The US elections and the negative connotations around 'outsourcing' could be the reason behind this exacerbated need."

The fact is that this industry not only drives business efficiency and promotes business optimization, it also transforms businesses by making them globally competitive, in a most cost-effective manner. So, it is wrong to view it as an industry that shifts jobs from Place A to B, destabilizing economies. It is about business value acceleration.

So the second step is to rebrand the industry in such a way that it tells the India success story better, highlights the future potential, and corrects poor perceptions.

Ironically, the clients of Indian BPM industry are well aware of the evolution (from transactional work to transformational projects) of this segment. It is the political and social atmosphere that is causing the greatest issue.

The BPM segment provides 1.98 million direct jobs and 7.5 million indirect jobs. With a CAGR of 17 percent for the past six years, it is expanding into smaller cities with a vision of providing employment to 25 million by 2015. Unfortunately, the negative image has stuck. So much so that parents are discouraging their children from joining the industry and youngsters are seeking alternative career paths. This comes at a time when the industry has matured from a shift and cost arbitration operation to high-value business management employing experts in the fields of finance, analytics, aviation, law and healthcare: 15 percent to 20 percent of the workforce comprises engineers, doctors, lawyers, accountants, and PhDs. In addition to 500 Indian companies, about 200 MNCs have set up shop in India in this sector.

The third move is for industry leaders to come together to bust the myths around the segment. Genpact, Tata Consultancy Services, Aegis, WNS, Infosys BPO, Wipro BP, Cognizant, Firstsource, and others are rallying together.

On behalf of NASSCOM, TCS in association with a third party will conduct a study on the perceptions about the erstwhile BPO business among various stakeholders -- academia, students, parents, employees, companies, and the general public. Finer details of the image correction exercise will then be worked out.

Arising out of this will be separate initiatives for talent pool development, branding, travel cost optimization, and streamlining of employment processes of the industry. A taskforce of senior executives will compile good practices and methodologies, while some companies will take up action plans with implementation timelines for allotted thrust areas.

Lastly, NASSCOM has set up a committee headed by Infosys co-founder and chairman emeritus, N R Naryana Murthy to draw a roadmap for the next decade. This is because most old contracts signed 10 years ago are coming up for renewal now. With global clients looking to reduce smaller deals and engage with BPM "partners" for the next 10 years, the industry envisages a 25 percent increase in large projects. So it is important for the association to keep pace in terms of infrastructure to address the opportunities in not just BPM, but core IT, infrastructure, digital solutions, and engineering services.

In fact, Nasscom is also engaging with competitor countries to improve trade interactions and help member companies to understand the market potential and set up operations there. On its radar are Latin America, China, Japan, Africa, Middle East, and Canada. Nasscom president Som Mittal was quoted in the Times of India saying, "It is important for enterprises to enter under-penetrated markets and also to intensify their focus on geographies that offer sizable expansion opportunities."

The industry is doing whatever it takes to stay ahead, but given the competition, world job crisis, and perception issues, it will take more than a name change.

View Comments: Threaded | Newest First | Oldest First
MDMConsult   Indian BPO Becomes BPM   1/25/2013 3:23:38 PM
Indian BPM
BPM automation and streamlining processes in management will benefit India with our gloabal economy highly competitive. Business Process Management reduces processes by automating. 

 
Salik   Indian BPO Becomes BPM   1/26/2013 1:54:22 AM
Re: Indian BPM
It's more and more about competiting globally these days, and I am certain becoming a BPM organization would definitely boost the indian economy with automations and paralellism. The work load will be reduced which is a good thing, but it shall take time to settle in. Also, Indian BPO industry needs to impart education and success stories behind the switch to better and effectively come in the BPM industry.
MDMConsult   Indian BPO Becomes BPM   1/26/2013 11:28:06 AM
Re: Indian BPM
Agreed. Cost reduction in outside hiring to manage is significant. Utilizing BPM services to manage help desktop support and IT functions reduce costs in these areas. With growth in hiring areas, cloud based applications, greater adoption of SaaS and managing of data center operations by service providers are having a positive effect on the IT BPM budgets.
kicheko   Indian BPO Becomes BPM   1/26/2013 4:19:36 PM
Re: Indian BPM
it wont be long before we come to the point where we have re-outsourcing just the same wat we have subcontracting. then we'll have the main outsourcing service providers concentrate more on management whole their suns do the job. It would be a lot complicated though,  no doubt.
KeithGrinsted   Indian BPO Becomes BPM   1/26/2013 6:15:32 PM
Re: Indian BPM
What goes around comes around!

Once everything is outsourced there'll be nothing left!

So stuff will be 'insourced' from outside as the imbalance kicks in!

We've seen similar with the car industry in UK.  Cars were made here.  Then they were made in Japan, Korea, etc. Now these same manufacturers are beginning to bring construction back to UK.

The move to BPM is a sensible one as it broadens the potential for the service providers in India.  But sooner or later they will reach saturation.

The danger with reliance on one sector is that if that sector should dry up then they are left with nothing.
kicheko   Indian BPO Becomes BPM   1/27/2013 4:27:56 PM
Re: Indian BPM
I would imagine though that in the outsourcing chain the work gets sent further down in the hierarchy of emerging markets to places where even cheaper labor can be found,
David Wagner   Indian BPO Becomes BPM   1/28/2013 1:28:59 AM
Re: Indian BPM
I'm a big fan of the power of words so if BPO changing to BPM makes people happy, that's great. But my general feeling is that outsourcing is like a cat chasing a laser pointer on the wall. You always have to keep moving your work to keep chasing the savings. It gets silly after awhile.
David Wagner   Indian BPO Becomes BPM   1/28/2013 7:56:45 PM
Re: Indian BPM
You know the more i think about this, the more it makes sense. My perception of the Indian BPO industry is so clouded by politics, bad American sitcoms, and out of date information. I'm smart enough to know better than to believe it, but I have no real source of information to help get a real feel for the gorund truth. BPM helps me see that the ground truth isn't just cheap outsourcing of easy projects which is the reputation they're trying to shake.
KeithGrinsted   Indian BPO Becomes BPM   2/3/2013 4:08:16 PM
Re: Indian BPM
@David I think you are right - it is so easy to be influenced by the stereotypes you see on TV and the like.

I see mixed messages from India and I guess that is probably the true state.  

I read a book a year or two ago (I have read more then one!), well, a novel actually.  The White Tiger by Aravinda Adiga (winner of the Man Booker prize in 2008) talks of the real life in India.  To quote one newspaper reviewer '...welcome...to an India where Microsoft call centre workers tread the same pavement as beggars who burn rubbish for warmth...'

I found this a great eye-opener to the difference between the 'haves' and the 'have nots', to the highest levels of technology and the lowest.

http://www.amazon.com/White-Tiger-Novel-Aravind-Adiga/dp/1416562605
MDMConsult   Indian BPO Becomes BPM   1/26/2013 9:04:09 PM
Re: Indian BPM
Yes, the transformation in this area is quite rapid. The industry definitely has matured. Management conducting increasingly complex work and the services are being delivered from different geographies,
Pedro Gonzales   Indian BPO Becomes BPM   1/28/2013 6:31:56 PM
rebranding name and service
I agree that  india companies should rebrand themselves, there will always another country that can provide software at a cheaper cost.  If they can provide other types of services or consult american companies on how to improve their processes by working with Indian companies then the rewards are greater.  My friend told me the story of an american company trying to cut cost by move to india, but the change didn't  produce their desire results so they move to eastern europe were they have many office and are achieving their goals

 

 

 
Gigi   Indian BPO Becomes BPM   1/29/2013 9:43:43 PM
Gigi
Business Transformations
Sudha, I think that's the best advantage of Indian industry, they are always willing to change themselves with respect to the market needs and customer requirements. They know it well that such outsourcing business from western countries, especially from US may not last long and competition from other countries (Philippines, Australia etc) are tight. So the best option is undergoing transformation based on business requirements/clients.


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