Since the mid-80s, when the Indian government opened up the country's markets, BPO in India has been one of the strongest and most enduring sectors of the country's economy. Initially, the industry was focused on providing simple services such as data entry and customer service operations. Very quickly, however, India's BPOs began to focus more intently on the ITES (Information Technology Enabled Services) segment.
With the advent of Artificial Intelligence (AI), however, many of the highly repetitive tasks typically outsourced are becoming increasingly automated, and BPOs in India will need to shift to providing higher-value services. "This shift to Knowledge Process Outsourcing (KPO) is largely due to the recognition by companies that there are many processes that can't easily be automated but still require human interaction. Some factors position Indian BPO vendors well to fill the demand for KPO services, such as an extremely large labour pool and highly skilled workforce. Yet there are also factors, mostly in the form of competition from other outsourcing countries, that will be important for India to address as KPO continues to grow," says Ralf Ellspermann, CEO of PITON-Global , an award-winning BPO provider.
As BPO in India evolves into providing higher-value services, one of the factors that will be important for local outsourcing vendors (and will also need to be recognised by the Indian government) is being able to attract highly-skilled, educated employees. The majority of BPO jobs are based in tier 2 or 3 cities due to their lower costs and easier access to a large workforce. However, many of these cities have little focus on technological or other educational opportunities that are necessary for KPO employees.
Despite this, India still does have an advantage over other countries because overall, India produces graduates from MBA, PhD, IT, and engineering programs at a much higher rate than other countries with large outsourcing industries. "This kind of specialized knowledge and expertise is exactly what KPO service requires, and with India's large pool of available talent, the country is in a good position to meet the demand," says Ellspermann.
Of course, cost is an important consideration when offshoring business process outsourcing services. Reducing costs has been one of the primary considerations for companies since the BPO industry took flight two decades ago, and that remains relevant today. India has always been a relatively low-cost destination for BPO services compared to countries such as the United States and the United Kingdom. India can offer services at a fraction of the cost – often as much as 50% savings – of these other countries. It is due, in part, to the large pool of available labour; however, it is also reflective of the strong wage pressure that BPO in India faces. Competition in India is constantly pushing wages up, and most companies find it difficult to maintain low-cost structures. Despite this growing labour cost, many service providers are still choosing to keep their operations in India because of the market's sheer size (with over one billion people) and its educated workforce.
Competition for KPO services is heating up, and India will need to be aware of the challenges that other countries are posing. The Philippines, in particular, has already taken the lead as the world's largest contact centre outsourcing destination. The country enjoys a close cultural affinity with the US (the largest service buyer of BPO services in the world) and has a highly English proficient population. Building off its position as the leader in voice-based contact centre services, the Philippines has also made significant investments into developing its own KPO industry. Over the last five years, the Philippines has pushed into KPO services such as medical transcription and financial categorization.
This expansion has led to an increasingly heated battle with India for market share in global KPO. "India does maintain many advantages that put it in a good position to meet the demand of companies looking to offshore their KPO. However, for BPO in India to maintain its current leading position in the global outsourcing market, it will be important for the country to continue to focus on developing and growing its KPO. This will require making investments in education and training, as well as creating an environment that is conducive to attracting businesses looking to outsource their KPO services," explains Ellspermann.
