IT BPO Industry
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Transcript of IT BPO Industry
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IT-BPO Industry- Analysis
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Introduction
Wave I: Indian ITindustry started
growing in the 1980s
with first services
being made towards
automation of
manual processes.
Wave II: This was in
the late 1990s when
Indian IT offered low
cost solution to
American clients.
Wave III:
Consolidation of
BPO,KPO, IT Services
Wave IV: There is
emergence of
advanced services
like Big Data,
Analytics, Cloud to
provide wholesome
business solutions to
clients
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Indian IT-BPO Industry
The 1990s heralded the golden era of Information Technology in thecountry. It transformed the economic landscape of a nation that wasunder the clutches of the government till 1994.
Liberalisation, privatisation and globalisation became the norm,even as the Indian economy made giant strides in IT and ITes (IT
enabled services). Today, with a total revenue of US$70 billion, theIndian IT industry is touted as one of the most robust industriesworld-wide.
A study by National Association of Software and ServiceCompanies (Nasscom)-Deloitte shows that the contribution of theIT/ITes industry to the country's GDP has gone up to a share of 5%
in 2007 from a meagre 1.2% in 1998. Software exportsfrom India have increased and account for about 60% of India's totalsoftware revenue.
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STRENGTH
Leadership in sophisticated solutions that enable
clients to optimize the efficiency of their business.
Proven Global delivery model
Commitment to superior quality and processexecution
Strong Brand and Long-Standing ClientRelationships
Ability to scale Innovation and leadership
WEAKNESSES
Excessive dependence on US for revenues, 67% of revenues from USA.
Weak player in domestic market. Only 1 % of
revenues from India low as compared to peers.Low R & D spending as compared to global ITcompanies only 1.3 % of total revenues.
Low expertise in high end services like
Consultancy and KPO
OPPORTUNITIES
Domestic market set to grow by 20%.
Expanding into new geographies Europe,Middle East etc.
Acquiring companies to increase expertise inConsultancy, KPO and package implementation
Opening offices and development centers in costadvantage countries such as those in LatinAmerica and Eastern Europe
THREATS
Global economic slowdown may continue forseveral years hence low IT spending globally.
US Govt. against outsourcing.
Shrinking margins due to rising wage inflation,Rupee-dollar movement affects revenue andhence margins.
Increased competition from foreign firmslike Accenture, IBM etc
.Increased competition from low-wage countries
like China, Indonesia etc.
SWOT
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Competitive Analysis: Porters 5 Forces
Medium rivalry
No destructive competition due to low exit barriersEntry Barriers
Intense RivalryLevel of Rivalry
None; Input is manpowerSupplier Power
Buyer conc. v/s firm concentration- Varies for
companies. Tier II companies have higher Buyer concBuyer Power
However switching costs are high
Substitution with other vendors is feasibleSubstitute
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IT-BPO Industry Growth Over the Last 4 Years
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Key Highlights during FY2012
Milestone year for Indian IT-BPO industry-aggregate revenues cross the USD 100 billionmark, exports at USD 69 billion
Within the global sourcing industry, India wasable to increase its market share from 51 per centin 2009, to 58 per cent in 2011
The industry continues to be a net employmentgenerator - expected to add 230,000 jobs in
FY2012, thus providing direct employment toabout 2.8 million, and indirectly employing 8.9million people
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Software and services exports- 2012
58%23%
19%
% of total Software and services exports
IT Services
BPO
ER&D, Software Products
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Challenges faced by the IT-BPO
Industry Working in a BPO, many feel is a job that does not require much skill. Any
body possessing a basic education, good communication skills isemployable after some training. Companies do not mind taking in people
who are middle aged, and homemakers. There is no sense of
accomplishment among the employees.
Financial desperation is mostly the reason behind a person joining BPO
The tasks that BPOs perform are diverse like telemarketing, technical
support service, customer support service, insurance processing, data
entry and conversion services. Thus, there can be no standardized training
program suitable for all the BPOs.
In many cases, the outsourcers think only of achieving targets which can
at times be unrealistic. Thus , this creates dissatisfaction in an employee
Attrition in BPOs
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Future Prospects
Global GDP, which grew by2.7 per cent in 2011, is
expected to grow 2.5 percent in 2012
Developing economies togrow thrice as fast as the
developed economies.
Better economic conditionsin the second half of theyear signifying return of
consumer confidence andrenewal of business growth,
is expected to drive ITspending going forward.
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Future Prospects
Indian IT-BPO services
exports expected to
grow by 11-14 per cent
while domestic servicesto grow by 13-16 per
cent (in Rs terms)
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Action themes for the IT-BPO industry
to remain competitive and profitableTo increase operational
efficiencies, reinvent and
embrace new business
models to offer customers a
transformed business
proposition
Drive concerted initiatives
to strengthen theinnovation capacity and
research capabilities
through specific domain
focus and by encouraging
R&D collaborations and
public-private
partnerships.
Continue to strengthen the
long-term entrepreneurial
environment
Enhance the skilled talent
pool in the country and
focus on specialisation
Continue the use of ICT for
inclusive growth. Ensurethat the basic necessities
like education for masses,
quality healthcare and
employment and skill
generation is benefited by
ICT