The BPO industry which, for long, was seen as the poorer cousin to the IT services industry, may be leading recovery from the recent economic slump. This stems from decision makers needing to cut costs on the operations front, as well as on the technology front. And, across the outsourcing spectrum, first-time outsourcers are trying out India vendors. This is the gist of what Phaneesh Murthy, CEO, iGate, had to say, among other things, when eWorld met him recently.

Aftermath of economic turmoil

There a few trends here. First, the Financial Services companies in the US have reached the end of their M&A work and consequently are starting to make decisions. That’s a positive. Normally, you would have expected a flush of projects in the January-March quarter but because of the M&A work, no decisions were made at that time. The most important thing now is that the decisions are getting to be made.

The second trend is that recovery in the outsourcing space will be BPO-driven. Fortune 1000 CIOs spend 17-19 per cent of their IT dollars in India, while the F1000 COOs spend only about 2-3 per cent of their operations dollars in India. With the need to dramatically restructure costs, I see the operations dollar tracking upwards quite significantly now and a big wave of BPO work coming to India. The challenge, on the negative side, is that one never knows if the operations work is going to land in captives (owned by those clients) or with third-party vendors. (Typically, the bulk of IT work always lands with third parties.) Read more…

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