General Management @ Knowledge Zone



BPO Services: Next Growth Engine for the Developing World

- by Priyanka Ghosh & Alvika Derhgawen *

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Though the growth is phenomenal, the margins of the industry are low primarily due to the fact that most of the companies are in the nascent stage. It is expected that the entire BPO industry would plateau at net profit margin figures at around 20%.

FY '03 Overview
  Spectramind e-Serve Msource HCL BPO Progeon
Net Sales 165     256     72     133@     21    
Net Profit NA     28     -2     -18     -3    
OPM (%) 24*     25     4     0.4     NA    
Employees 5106     3500     2587     1466     539    
* PBIT / Revenue                    @ Gross Revenues Rs. Cr.

Table: Financials of Listed BPO Companies in India in FY'03

9. ADVANTAGES OF BPOs TO DEVELOPING NATIONS

The opportunities in software services and the BPO-ITeS areas in developing countries like India is riding the wave of outsourcing and garnering large increases in revenues, employment and foreign exchange earnings.

The pressure to outsource non-core operations and concentrate on core business functions has always been characteristic of large companies. Initially, this resulted in the hiving off of certain operations to be undertaken by specialized, local firms in the developed countries themselves.

The change now is that, with the increasing availability of cheap and better or larger network technology, communications infrastructure and bandwidth, many of these services can be managed and provided from developing nations.

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* Contributed by: -
Priyanka Ghosh & Alvika Derhgawen,
PGDIM, IM-11,
NITIE, Mumbai.