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Opportunities in the Indian Domestic BPO Market

ValueNotes Database Pvt. Ltd.
July 1, 2008
148 Pages - SKU: VN2207364

Abstract Table of Contents Related Reports

Countries covered: India

While the offshore (international) BPO market faces pressures with economy-wide slowdown in developed markets, the domestic BPO market is getting ready to take off. According Arun Jethmalani, CEO, ValueNotes, “Unlike the overseas business, labor or cost arbitrage does not drive the domestic BPO market. It’s strategic factors such as the need to scale rapidly, focus on core competencies, enhanced productivity and reduced time to market that are driving domestic demand”.

ValueNotes’ research indicates that the domestic BPO industry stands at an inflection point, with the growing scale of Indian buyers as well as the emergence of significant vendors with greater capabilities. The recently released report by ValueNotes estimates the share of third party revenues is 27% of the domestic BPO market, at Rs. 18 billion for FY08. This is expected to grow at a CAGR of 44% over the next four years reach Rs. 77 billion by FY12.

According to Neeraja Kandala, analyst and co-author of the report, “The outsourcing opportunity in the domestic BPO market will gain impetus over the next couple of years with the increased buyer awareness and adoption of outsourcing across industry verticals. Reforms in banking, financial services and insurance will further drive the future growth.”

The vendor landscape has over 700 large and small service providers. Large BPOs like WNS and Genpact traditionally catering to the international market are focusing on building their domestic BPO divisions. We have classified the service providers present in the domestic BPO market into four broad categories:

International leaders (established BPO service providers with strong presence in international BPO market like MphasiS)
India leaders (primarily focused on domestic market like Aegis, InfoVision and Omnia BPO)
Emerging companies (companies building capabilities and currently offering specialized services on a small scale like Caretel, vCustomer)
'Me-too’ players (offering undifferentiated low value services)

In the absence of cost arbitrage, creating sustained value from outsourcing will be a critical challenge for service providers in the long term. Currently, services outsourced by the Indian companies are largely limited to high volume, back office jobs and customer support activities. Pranav Dixt Analyst and co-author of the report says “Most of the Indian companies are outsourcing for the first time. Further growth in outsourcing volumes will be largely dependent on performance of initial engagements and will unleash opportunities higher up the value chain.”

This report provides an in-depth analysis of the domestic BPO market. This study is based on extensive interviews with over 300 companies in various industry verticals and all major service providers. The report is designed to help:

Indian companies looking to outsource their services
Existing service providers to assess the competitive environment in domestic BPO market
Other potential service providers to assess opportunities across various industries
Venture capital companies looking for investment opportunities in specialized domestic BPOs
Researchers looking for information on domestic BPO industry

The study analyzes the sectoral opportunity and emerging trends in the large and emerging verticals - Banking, Financial Services, Insurance, Telecom, Government, Retail, Logistics, Airlines and Travel and Hospitality.

1. Executive Summary
2. Domestic Outsourcing Opportunity: 2.1 Market Size; 2.2 India Opportunity
3. Banking: 3.1 Structure of the Indian Banking Industry; 3.2 Market Share; 3.3 Trends and Insights on the Indian Banking Industry; 3.4 Outsourcing in the Indian Banking Industry; 3.5 Indian Banks Lag Behind; 3.6 Drivers and Constraints; 3.7 Services Outsourced by Indian Banks; 3.8 The Buyer Perspective; 3.9 Outsourcing Market Size; 3.10 Banking BPOs - Vendor Evolution; 3.11 Vendor Landscape; 3.12 Key Trends and Insights
4. Telecom: 4.1 Telecom Industry - Overview; 4.2 Industry Structure; 4.3 Market Share; 4.4 Trends and Insights; 4.5 Outsourcing in the Telecom Sector; 4.6 Outsourcing Drivers; 4.7 Services Outsourced; 4.8 Big Deals; 4.9 Market Size; 4.10 Domestic Telecom BPOs; 4.11 Key Trends and Insights
5. Government: 5.1 Entities in the Government Sector; 5.2 Services Outsourced; 5.3 Outsourcing Market Size; 5.4 Trends and Insights
6. Financial Services: 6.1 Industry Overview; 6.2 Capital Market Entities; 6.3 Mutual Funds; 6.4 Non Banking Financial Institutions; 6.5 Trends and Insights; 6.6 Outsourcing in Financial Services; 6.7 Market Size and Insights
7. Insurance: 7.1 Insurance Industry Overview; 7.2 Industry Structure 7.3 Market Size and Growth; 7.4 Trends and Insights; 7.5 Outsourcing in the insurance industry; 7.6 Outsourcing Drivers; 7.7 Services Outsourced and Outsourceability; 7.8 Insurance BPOs; 7.9 Market Size; 7.10 Trends and Insights
8. Airlines: 8.1 Industry Overview; 8.2 Industry Structure; 8.3 Domestic Scheduled Airlines; 8.4 Market Size; 8.5 Key Insights and Trends; 8.6 Services Outsourced and Outsourceability; 8.7 Outsourcing Contracts; 8.8 Vendors in the Industry; 8.9 Drivers and Inhibitors; 8.10 Market Size; 8.11 Key Trends and Insights
9. Retail Industry: 9.1 Structure of the Retail Industry; 9.2 Market Segments; 9.3 Organized Sector; 9.4 Trends and Insights; 9.5 Outsourcing in the Retail Sector; 9.6 Services and Outsourceability; 9.7 Retailers and Outsourcing; 9.8 BPO Vendors in Retail; 9.9 Drivers and Inhibitors; 9.10 Market Size; 9.11 Key Trends and Insights
10. Logistics: 10.1 Industry Structure; 10.2 Market Size and Share; 10.3 Growth Drivers; 10.4 Trends and Insights; 10.5 Outsourcing in the Logistics Sector; 10.6 Market Size; 10.7 Outsourcing Drivers; 10.8 Market Size; 10.9 Key Trends and Insights
11. Travel and Hospitality: 11.1 Industry Structure; 11.2 Services and Outsourceability; 11.3 Buyers and Vendors; 11.4 Market Size
12. Vendor Landscape: 12.1 The Domestic BPO Market; 12.2 Vendor Segmentation; 12.3 Vendor Analysis; 12.4 Key Issues and Challenges; 12.5 Vendor Trends
13. Research Methodology
14. About ValueNotes
Table of Exhibits: Exhibit 1: Domestic and offshore BPO market; Exhibit 2: Share of third party market; Exhibit 3: Revenues - Third party; Exhibit 4: Industry wise revenue break down; Exhibit 5: Services outsourced; Exhibit 6: Function wise revenue split; Exhibit 7: Service wise revenue break down; Exhibit 8: Services maturity Exhibit 9: Market size; Exhibit 10: Rapid growth verticals; Exhibit 11: Emerging verticals; Exhibit 12: Key constraints; Exhibit 13: Structure of the Indian banking industry; Exhibit 14: Types of entities in Indian banking industry; Exhibit 15: Commercial banks; Exhibit 16: PSBs losing market share to private and foreign banks; Exhibit 17: Banking industry growth; Exhibit 18: Proposals by Raghuram Rajan Committee and implication on outsourcing; Exhibit 19: CBS deployment in Indian PSBs; Exhibit 20: Outsourcing maturity - Global vs. Local; Exhibit 21: Outsourcing - drivers and constraints; Exhibit 22: Outsourcing in the banking industry; Exhibit 23: Services value chain; Exhibit 24: Type of banks and readiness to outsource; Exhibit 25: Banks and services outsourced; Exhibit 26: Revenue share by function type; Exhibit 27: Revenue share by type of services; Exhibit 28: Three scenarios for outsourcing in the banking sector; Exhibit 29: Reforms could create huge opportunities; Exhibit 30: Vendor evolution; Exhibit 31: Banking BPOs; Exhibit 32: Domestic focus for large international vendors; Exhibit 33: Factors driving outsourceability; Exhibit 34: Banks and services outsourced; Exhibit 35: Banks to leverage on IT outsourcing; Exhibit 36: Contracts in IT and BPO; Exhibit 37: India’s telecom statistics; Exhibit 38: Market segments; Exhibit 39: Wireline service providers; Exhibit 40: Market share - GSM; Exhibit 41: Market share - CDMA; Exhibit 42: Growth of the telecom industry; Exhibit 43: Growth in tele-density; Exhibit 44: List of new LoIs; Exhibit 45: Growth in telecom outsourcing; Exhibit 46: Processes outsourced; Exhibit 47: Outsourcing deals in telecom; Exhibit 48: Market size; Exhibit 49: Major vendors; Exhibit 50: Entities in the government sector; Exhibit 51: Outsourcing projects in government; Exhibit 52: Projects planned by the Dept. of IT and communications; Exhibit 53: Outsourcing market; Exhibit 54: Outsourcing in government: future outlook; Exhibit 55: Market capitalization; Exhibit 56: Mutual funds and assets under management; Exhibit 57: Financial companies and services offered; Exhibit 58: Market size; Exhibit 59: Services outsourced; Exhibit 60: International comparison of insurance penetration; Exhibit 61: International comparison of insurance density; Exhibit 62: India’s insurance industry; Exhibit 63: Market segments; Exhibit 64: Type of business; Exhibit 65: Market players; Exhibit 66: Total premium underwritten by life insurers; Exhibit 67: Gross premium underwritten by non-life insurance; Exhibit 68: Services and outsourceability; Exhibit 69: Vendors; Exhibit 70: Market size; Exhibit 71: Insurance industry outsourcing; Exhibit 72: Large BPOs; Exhibit 73: Market segments; Exhibit 74: Market share of scheduled domestic airlines; Exhibit 75: Industry revenues - scheduled domestic airlines; Exhibit 76: Market share of merged entities; Exhibit 77: Processes outsourced - airlines; Exhibit 78: Airlines outsourcing to third party vendors; Exhibit 79: Customer service and reservations outsourcing by select players; Exhibit 80: Deals; Exhibit 81: Services offered by vendors; Exhibit 82: Market size; Exhibit 83: Market segments and characteristics; Exhibit 84: Revenue share of retail segments; Exhibit 85: Major retail players; Exhibit 86: Growth in the Indian retail sector; Exhibit 87: Outsourcing in Indian retail - focus on large retailers; Exhibit 88: Processes of a retailer; Exhibit 89: Processes outsourced by key retailers; Exhibit 90: Services offered by key vendors; Exhibit 91: Drivers and inhibitors; Exhibit 92: Market size; Exhibit 93: Global logistics markets - comparison; Exhibit 94: Logistics spend in India; Exhibit 95: India’s transport infrastructure Exhibit 96: Players in logistics services; Exhibit 97: Market size estimates Exhibit 98: Drivers and opportunities in logistics; Exhibit 99: Opportunities in logistics; Exhibit 100: Typical process flow for integrated logistics services; Exhibit 101: Market characteristics and impact on outsourcing; Exhibit 102: Relative outsourceability and complexity of processes; Exhibit 103: Current market size; Exhibit 104: Outsourcing drivers and opportunity; Exhibit 105: Market size - logistics; Exhibit 106: Vendors and offerings; Exhibit 107: Indian travel and hospitality industry; Exhibit 108: Category-wise break-up of hotels; Exhibit 109: Processes outsourced; Exhibit 110: Processes outsourced by select travel & hospitality companies; Exhibit 111: Key vendors - service offerings; Exhibit 112: Market size; Exhibit 113: Outsourcing revenue share in travel and hospitality; Exhibit 114: Domestic BPO landscape; Exhibit 115: Domestic revenues - third party; Exhibit 116: Third party vendor segmentation; Exhibit 117: Manpower estimates; Exhibit 118: Domestic BPO landscape; Exhibit 119: Vertical focus of key vendors; Exhibit 120: Clients; Exhibit 121: Service focus of key vendors; Exhibit 122: Types of billing rates; Exhibit 123: Average billing rates; Exhibit 124: Strengths and weaknesses of vendor groups; Exhibit 125: Frontrunners; Exhibit 126: Manpower estimates; Exhibit 127: Recent entrants

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